Rose Corporation (a calendar year taxpayer) has taxable income of $300,000, and its financial records reflect the following for the year. $\begin{array}{lr}
\text { Federal income taxes paid } & \$ 110,000 \
\text { Net operating loss carry forward deducted currently } & 70,000 \
\text { Gain recognized this year on an installment sale from a prior year } & 44,000 \
\text { Depreciation deducted on tax return (ADS depreciation woul d have been } \$ 10,000) & 40,000\
\text { Interest income on Iowa state bonds } & 8,000
\end{array}$ ? Rose Corporation's current E & P is:

Question

Quizplus · Accepted Answer

Earnings and Profits (E&P) calculation starts with taxable income ($300,000), then adjustments are made: add back federal income taxes paid ($110,000), net operating loss carryforward ($70,000) is not added back because it's already reflected in taxable income, add back the difference between tax depreciation and ADS depreciation ($40,000 - $10,000 = $30,000), and exclude interest income on state bonds ($8,000) because it's tax-exempt. Thus, the calculation is $300,000 + $110,000 + $30,000 - $8,000 = $432,000. However, the provided options do not match this calculation, indicating a possible misunderstanding in the question's interpretation or a mistake in the calculation process. Given the options, none directly align with the calculated figure, suggesting a reevaluation of the calculation or the question's details might be necessary.

Rose Corporation (A Calendar Year Taxpayer) Has Taxable Income of $300,000