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Sparrow Corporation (a calendar year, accrual basis taxpayer had the following transactions in 2013, its second year of operation

Taxable income $330,000
Federal income tax liability paid $112,000
Tax-exempt interest income $ 5,000
Meals and entertainment expenses (total) $ 3,000
Premiums paid on key employee life insurance $ 3,500
Increase in cash surrender value attributable to life ins. Premiums $ 700
Proceeds from key employee life insurance policy $130,000
Cash surrender value of life insurance policy at distribution $ 20,000
Excess of capital losses over capital gains $ 13,000
MACRS deduction $ 26,000
Straight-line depreciation using ADS lives $100,000
Dividends received from domestic corporations(less than 20% owned)$25,000

Sparrow uses the LIFO inventory method, and its LIFO recapture amount increased by $10,000 during 2013. In addition, Sparrow sold property on installment during 2012. The property was sold for $40,000 and had an adjusted basis at sale of $32,000. During 2013, Sparrow received a $15,000 payment on the installment sale. Finally , assume that no additional first-year depreciation was claimed. Compute Sparrow's current E & P.

 

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