When computing E & P, taxable income is not adjusted for § 179 expense.

Question

Quizplus · Accepted Answer

When computing Earnings and Profits (E&P), taxable income is adjusted for § 179 expense because § 179 deductions, which allow a business to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year, are not allowed in the calculation of E&P. Instead, the cost of such assets must be recovered over time through depreciation for E&P purposes.

When Computing E & P, Taxable Income Is Not Adjusted