Falcon Corporation ended its first year of operations with taxable income of $250,000. At the time of Falcon's formation, it incurred $50,000 of organizational expenses. In calculating its taxable income for the year, Falcon claimed an $8,000 deduction for the organizational expenses. What is Falcon's current E & P?
A) $200,000
B) $208,000
C) $250,000
D) $258,000
E) None of the above

Question

Quizplus · Accepted Answer

Falcon's current E&P is calculated by adding back the organizational expenses deduction to the taxable income, as these expenses are not deductible for E&P purposes. Thus, $250,000 + $8,000 = $258,000.

Falcon Corporation Ended Its First Year of Operations with Taxable