Chichester_AC 431_unit 4_assignment

Chichester_AC 431_unit 4_assignment - depreciation allowed...

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Current E&P Computation. Water Corporation reports $500,000 of taxable income for the current year. The following additional information is available: • For the current year, Water reports an $80,000 long-term capital loss and no capital gains. • Taxable income includes $80,000 of dividends from a 10%-owned domestic corporation. • Water paid fines and penalties of $6,000 that were not deducted in computing taxable income. • In computing this year’s taxable income, Water deducted a $20,000 NOL carryover from a prior tax year. • Water claimed a $10,000 U.S. production activities deduction. • Taxable income includes a deduction for $40,000 of depreciation that exceeds the
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Unformatted text preview: depreciation allowed for E&P purposes.+ Assume a 34% corporate tax rate. What is Waters current E&P for this year? Taxable Income $500,000 Plus: Dividends-received deduction ($80,000*.70) 56,000 NOL carryover 20,000 U.S. Production activities deduction 10,000 Depreciation 40,000 Total taxable income plus additions $626,000 Minus:Taxes payable on income ($500,000*.34) 170,000 Capital Loss 80,000 Fines and penalties 6,000 Total subtractions for calculating E&P 256,000 Water Corporations Current E&P $370,000...
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This note was uploaded on 11/14/2011 for the course AC 430 AC 430-01 taught by Professor Riese during the Spring '11 term at Kaplan University.

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