Orchard, Inc., reported taxable income of $800,000 in year 1 and paid federal income taxes of $168,000.Included in the company's computation of taxable income is gain from the sale of a depreciable asset for $200,000.The income tax basis of the asset was $50,000.The E&P basis of the asset using the alternative depreciation system was $75,000.Compute the company's current E&P for year 1.

Question

Quizplus · Accepted Answer

The Answer of Orchard, Inc., reported taxable income of $800,000 in year 1 and paid federal income taxes of $168,000.Included in the company's computation of taxable income is gain from the sale of a depreciable asset for $200,000.The income tax basis of the asset was $50,000.The E&P basis of the asset using the alternative depreciation system was $75,000.Compute the company's current E&P for year 1.