Pheasant Corporation ended its first year of operations with taxable income of $225,000. At the time of Pheasant's formation, it incurred $50,000 of organizational expenses. In calculating its taxable income for the year, Pheasant claimed an $8,000 deduction for the organizational expenses. What is Pheasant's current E & P?
A) $175,000.
B) $183,000.
C) $225,000.
D) $233,000.
E) None of the above.

Question

Quizplus · Accepted Answer

Pheasant Corporation's current E&P is calculated by adding back the organizational expenses that were deducted for tax purposes but not for E&P purposes. The $8,000 deduction is added back to the taxable income of $225,000, resulting in current E&P of $233,000.

Pheasant Corporation Ended Its First Year of Operations with Taxable