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 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

The net operating loss is adjusted for E&P purposes by adding back the difference between regular and E&P depreciation ($100,000 - $40,000 = $60,000) and the dividends received deduction ($10,000), but not the §179 expense. Thus, the E&P loss is $400,000 + $60,000 + $10,000 = $290,000.

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