Silver Corporation, a calendar year taxpayer, has taxable income of $550,000.Among its transactions for the year are the following: $\begin{array}{llr}
\text { Collection of proceeds from insurance policy on life of corporate } &\
\text { officer (in excess of cash surrender value)} &\$82,500\
\text { Realized gain (not recognized) on an involuntary conversion } &11,000\
\text {Nondeductible fines and penalties } &44,000\
\end{array}$
? Disregarding any provision for Federal income taxes, Silver Corporation's current E & P is:

Question

Silver Corporation, a calendar year taxpayer, has taxable income of $550,000.Among its transactions for the year are the following: $\begin{array}{llr}
  \text { Collection of proceeds from insurance policy on life of corporate } &\
 \text {   officer (in excess of cash surrender value)} &\$82,500\
 \text { Realized gain (not recognized) on an involuntary conversion } &11,000\
 \text {Nondeductible fines and penalties  } &44,000\
\end{array}$
 ? Disregarding any provision for Federal income taxes, Silver Corporation's current E & P is:

Quizplus · Accepted Answer

Current E&P is calculated by adding taxable income to the beginning balance of E&P and then subtracting distributions. In this case,
Beginning balance of E&P is zero because it is the first year.
Taxable income = $550,000
Therefore, current E&P = $550,000.
None of the transactions listed in the question suggest any distributions, so there are none to subtract from taxable income to find E&P. Therefore, the answer is B ($550,000 + $38,500 = $588,500).

Silver Corporation, a Calendar Year Taxpayer, Has Taxable Income of $550,000.Among