Loon IncReported Taxable Income of $600,000 in Year 1 and Paid

Essay

Loon Inc.reported taxable income of $600,000 in year 1 and paid federal income taxes of $126,000.Not included in the company's computation of taxable income is tax-exempt interest income of $30,000, disallowed meals expense of $15,000, and disallowed expenses related to the tax-exempt income of $4,000.Loon deducted depreciation of $200,000 on its tax return.Under the alternative (E&P)depreciation method, the deduction would have been $80,000.Compute the company's current E&P for year 1.