Abbot Corporation reported a net operating loss of $400,000 in 20X3, which the corporation elected to carryforward to 20X4. Included in the computation of the loss was regular depreciation of $100,000 (E&P depreciation is $40,000), first year expensingunder §179 of $50,000, and a dividends received deduction of $10,000. The corporation's current earnings and profits for 20X3 would be:

Question

Quizplus · Accepted Answer

The correct answer is A because the current earnings and profits for 20X3 would be ($290,000). This is calculated by taking the net operating loss of $400,000 and adding back the regular depreciation of $100,000, the first year expensing under §179 of $50,000, and the dividends received deduction of $10,000.

Abbot Corporation Reported a Net Operating Loss of $400,000 in 20X3