If the beginning balance in OAA is zero and the following transactions occur, what is the ending OAA balance? $$\begin{array} { l c }
\text { Depreciation recapture income } & \$ 21,000 \
\text { Payroll tax penalty } & 4,200 \
\text { Tax-exempt interest } & 5,700 \
\text { Nontaxable life insurance proceeds } & 3,900 \
\text { Insurance premiums paid (nondeductible) } & 2,900 \
\text { Charitable contributions } & 17,000
\end{array}$$

Question

If the beginning balance in OAA is zero and the following transactions occur, what is the ending OAA balance? $$\begin{array} { l c } 
\text { Depreciation recapture income } & \$ 21,000 \
\text { Payroll tax penalty } & 4,200 \
\text { Tax-exempt interest } & 5,700 \
\text { Nontaxable life insurance proceeds } & 3,900 \
\text { Insurance premiums paid (nondeductible) } & 2,900 \
\text { Charitable contributions } & 17,000
\end{array}$$

Quizplus · Accepted Answer

The ending OAA balance is calculated by adding tax-exempt interest ($5,700) and nontaxable life insurance proceeds ($3,900) and subtracting nondeductible insurance premiums ($2,900). The other items do not affect the OAA balance. Thus, $5,700 + $3,900 - $2,900 = $6,700.

If the Beginning Balance in OAA Is Zero and the Following