Grand River Corporation reported taxable income of $700,000 in 20X3 and paid federal income taxes of $238,000. Not included in the computation was a disallowed meals and entertainment expense of $2,400, tax-exempt income of $1,400, and deferred gain on a current-year transaction treated as an installment sale of $27,000. The corporation's current E&P for 20X3 would be:

Question

Quizplus · Accepted Answer

The correct answer is A.The current E&P for 20X3 would be $488,000. This is calculated by adding the taxable income of $700,000 to the tax-exempt income of $1,400 and subtracting the disallowed meals and entertainment expense of $2,400 and the deferred gain on the installment sale of $27,000.

Grand River Corporation Reported Taxable Income of $700,000 in 20X3