Mallard Corporation is a calendar year taxpayer formed in 2005.Mallard's E & P for each of the past 5 years is listed below.
2009 $140,000
2008 $200,000
2007 $195,000
2006 $340,000
2005 $ 80,000
Mallard Corporation made the following distributions in the previous 5 years.
2008 Land (basis of $350,000,fair market value of $400,000)
2005 $100,000 cash
Mallard's accumulated E & P as of January 1,2010 is:

Question

Quizplus · Accepted Answer

Accumulated E&P as of January 1, 2010 = total E&P for the past 5 years - distributions made in the past 5 years.
Total E&P for the past 5 years = $140,000 + $200,000 + $195,000 + $340,000 + $80,000 = $955,000
Distributions made in the past 5 years = $400,000 (fair market value of land) + $100,000 (cash) = $500,000
Therefore, accumulated E&P as of January 1, 2010 = $955,000 - $500,000 = $455,000.
Hence, the correct answer is B) $475,000.

Mallard Corporation Is a Calendar Year Taxpayer Formed in 2005