Question 1

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016.
-Gain realized (but not recognized) on a like-kind exchange.

Accepted Answer

Gain realized (but not recognized) on a like-kind exchange has no effect on current E&P, as it is not recognized for tax purposes.

Question 2

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016.
-Charitable contribution carryforward deducted in the current year.

Accepted Answer

A charitable contribution carryforward deduction would be a tax deduction in a previous year and would decrease taxable income in that year. Therefore, adjusting to arrive at current E & P for 2016 would involve adding back that deduction, resulting in an increase in E & P.

Question 3

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016.
-State income tax paid in the current year.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 4

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016.
-Intangible drilling costs deducted currently.

Accepted Answer

Intangible drilling costs that are deducted currently for tax purposes but are not deductible for E&P calculations would increase current E&P because you would add back these expenses to taxable income to arrive at E&P.

Question 5

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016.
-Excess capital loss in year incurred.

Accepted Answer

The answer of Using the legend provided, classify each statement...

Question 6

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016.
-Dividends received deduction.

Accepted Answer

The dividends received deduction reduces taxable income and increases E & P, therefore adjusting taxable income to arrive at current E & P would result in an increase.

Question 7

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016.
-Proceeds of life insurance received upon the death of a key employee (policy had no cash surrender value).

Accepted Answer

Proceeds of life insurance received upon the death of a key employee, where the company is the beneficiary and the policy had no cash surrender value, are generally not taxable. However, for E&P calculations, these proceeds are added back to taxable income, resulting in an increase to current E&P.

Question 8

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016.
-A decrease in the LIFO recapture amount during the year.

Accepted Answer

A decrease in the LIFO recapture amount during the year will result in a decrease in current E&P. Therefore, it is classified as a decrease.

Quiz 5: Corporations Earnings Profits and Dividend Distributions

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016. -Gain realized (but not recognized) on a like-kind exchange.

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016. -Charitable contribution carryforward deducted in the current year.

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016. -State income tax paid in the current year.

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016. -Intangible drilling costs deducted currently.

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016. -Excess capital loss in year incurred.

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016. -Dividends received deduction.

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016. -Proceeds of life insurance received upon the death of a key employee (policy had no cash surrender value) .

Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2016. -A decrease in the LIFO recapture amount during the year.