Problem 5-27 - Sub-Total = 331,633 10,000 increase in LIFO...

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330,000 Taxable income (112,000) Federal income tax liability paid 5,000 Tax- exempt interest income (1,500) Meals and entertainment expenses (total) 1/2 was disallowed (3,500) Premiums paid on key employee life insurance 700 Increase in cash surrender value attributable to life insurance premiums 130,000 Proceeds from key employee life insurance policy (20,000) Cash surrender value of life insurance policy at distribution (13,000) Excess of capital losses over capital gains 13,000 26,000 MACRS deduction (16,000) Straight- line depreciation using ADS lives (20,000) Section 179 expense elected during 2010 100,000 933 Organizational expenses incurred during 2010 (14,000/180) * 12 = 933 17,500 Dividends received from domestic corporations (less than 20% owned)
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Unformatted text preview: Sub-Total = 331,633 10,000 increase in LIFO recapture amount (3,000) payment on installment sales Total E&P = 338,633 Sparrow uses the LIFO inventory method, and its LIFO recapture amount increased by $ 10,000 during 2011. In addition, Sparrow sold property on installment during 2010. The property was sold for $ 40,000 and had an adjusted basis at sale of $ 32,000. During 2011, Sparrow received a $ 15,000 payment on the installment sale. Finally, assume that Sparrow elected to amortize qualified organizational expenses during 2010 and that no additional first- year depreciation was claimed. Compute Sparrow s current E & P....
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This note was uploaded on 02/22/2012 for the course ACCT 467 taught by Professor Ruhupatty during the Spring '12 term at Andrews Univeristy.

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