{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Class 6d Corp E&P

Class 6d Corp E&P - Taxation of the Business Entity...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Taxation of the Business Entity Online Lecture Series Presented by Akore Berliner, CPA E&P and Corporate Distributions Earnings & Profits • Determines if corporate distributions are treated as Dividends or as Return of Capital • Corporation's economic ability to pay dividends without impairing capital • No definition of E & P in Code • Similar to Retained Earnings ▫ but often not the same Taxable Dividends 1. Distributions from corporate earnings and profits (E & P) ▫ Treated as a dividend distribution  Taxed as ordinary income or as preferentially taxed dividend income 1. Distributions in excess of E & P ▫ Nontaxable to extent of shareholder’s basis (i.e., a return of capital) 1. Excess distribution over basis is capital gain Calculating Earnings & Profits • Calculation generally begins with taxable income , plus or minus certain adjustments ▫ Add previously excluded items and certain deductions to taxable income including:  Muni bond interest  Excluded life insurance proceeds  Federal income tax refunds  Dividends received deduction  Domestic production activities deduction ▫ Subtract certain nondeductible items:  Related-party losses  Expenses incurred to produce tax-exempt income  Federal income taxes paid  Key employee life insurance premiums (in excess of increase in cash surrender value)  Fines, penalties, and lobbying expenses Calculating Earnings & Profits • Certain E & P adjustments shift effect of transaction from the year of inclusion in or deduction from taxable income to year of economic effect, such as: ▫ Charitable contribution carryovers ▫ NOL carryovers ▫ Capital loss carryovers • Gains and losses from property transactions ▫ Generally affect E & P only to extent recognized for tax purposes ▫ Thus, gains and losses deferred under the like-kind exchange provision and deferred involuntary conversion gains do not affect E & P until recognized Calculating Earnings & Profits • Other adjustments ▫ Accounting methods for E & P are generally more conservative than for taxable income, for example:  Installment method is not permitted...
View Full Document

{[ snackBarMessage ]}

Page1 / 23

Class 6d Corp E&P - Taxation of the Business Entity...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon bookmark
Ask a homework question - tutors are online