In the current year, Carnation Corporation has a § 179 expense of $60,000. As a result, in the current year, taxable income must be increased by $48,000 to determine current E & P.

Question

Quizplus · Accepted Answer

This is true according to the rules for calculating current E&P under IRC section 312. Section 179 expense is added back to taxable income for this purpose, so if the corporation had $60,000 in section 179 expense, taxable income would be increased by $60,000 - $12,000 (which is 20% of $60,000) = $48,000.

In the Current Year, Carnation Corporation Has a § 179