Madison Corporation reported taxable income of $400,000 in 20X3 and accrued federal income taxes of $136,000. Included in the computation of taxable income was regular depreciation of $200,000 (E&P depreciation is $60,000)and a net capital loss carryover of $20,000 from 20X2 utilized in 20X3. The corporation's current E&P for 20X3 would be:

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To calculate the current E&P for Madison Corporation for 20X3, adjustments need to be made to the taxable income to account for differences in depreciation methods and the treatment of the net capital loss carryover. Starting with the taxable income of $400,000, add back the difference between regular depreciation ($200,000) and E&P depreciation ($60,000), which is $140,000. The net capital loss carryover of $20,000 utilized in 20X3 does not affect E&P, so it is not added back. Therefore, the current E&P for 20X3 is $400,000 + $140,000 = $540,000. However, there seems to be a mistake in my calculation as none of the provided options match. Let's correct the approach:To correctly calculate the current E&P:- Start with taxable income: $400,000- Adjust for the difference in depreciation: Add back the excess of tax depreciation over E&P depreciation ($200,000 - $60,000 = $140,000)- The net capital loss carryover does not need to be adjusted because it's already reflected in the taxable income and doesn't affect E&P differently.Correct calculation: $400,000 + $140,000 = $540,000. Given the options do not match this result, it appears there was an error in my initial explanation. The correct approach to find the E&P should involve adjustments for items that differ between taxable income and E&P calculations, but without the exact options matching, the explanation provided doesn't align with the choices given. The correct answer should reflect adjustments for depreciation differences and the treatment of the net capital loss carryover, but it seems there was a misunderstanding in the application of these adjustments to the options provided.

Madison Corporation Reported Taxable Income of $400,000 in 20X3 and Accrued