Which of the following statements is incorrect with respect to determining current E & P?
A) All tax-exempt income should be added back to taxable income.
B) Dividends received deductions should be added back to taxable income.
C) Current-year charitable contributions in excess of the 10% of taxable income limit should be subtracted from taxable income.
D) Federal income tax refunds should be added back to taxable income.
E) None of these statements are incorrect.

Question

Quizplus · Accepted Answer

Each statement correctly describes adjustments that are typically made when calculating current Earnings and Profits (E&P) for a corporation. Tax-exempt income and dividends received deductions are added back because they reduce taxable income but not E&P. Excess charitable contributions are subtracted since they are limited for tax purposes but fully deductible for E&P. Federal income tax refunds are added back as they do not affect E&P calculation.

Which of the Following Statements Is Incorrect with Respect to Determining