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 taxable loss was regular depreciation of $100,000 (E&P depreciation is $40,000), first year expensing under §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

($400,000) + $60,000 + $40,000 + $10,000 = ($290,000). The first year expensing under §179 must be capitalized and amortized over 5 years ($10,000 per year).

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