Walloon, Inc

Short Answer

Walloon, Inc. reported taxable income of $1,000,000 in year 2 and paid federal income taxes of $340,000. The company reported a capital gain from sale of investments of $150,000, which was partially offset by a $40,000 net capital loss carryover from year 1, resulting in a net capital gain of $110,000 included in taxable income. Compute the company's current E&P for year 2.