The beginning balance in Swan, Inc.\'s OAA is $6,700, and the following transactions occur. Depreciation recapture income $21,600 Payroll tax penalty (4,200) Tax exempt interest income 4,012 Nontaxable life insurance proceeds 100,000 Life insurance premiums paid (nondeductible) (3,007) Swan\'s ending OAA balance is $ Solution .

1. The beginning balance in Swan, Inc.'s OAA is $6,700, and the following transactions occur.
Depreciation recapture income $21,600
Payroll tax penalty (4,200)
Tax exempt interest income 4,012
Nontaxable life insurance proceeds 100,000
Life insurance premiums paid (nondeductible) (3,007)
Swan's ending OAA balance is $
Solution
OAA
Beginning balance 6,700
Tax-exempt interest revenue 4,012
Life insurance proceeds 100,000
Life insurance premiums -3,007
Ending balance 107,705
Note: The nondeductible penalty reduces AAA.