Only income and deductions included on a corporation's income tax return are included in the computation of current earnings and profits.

Question

Quizplus · Accepted Answer

The computation of current earnings and profits (E&P) includes not only the items of income and deductions reported on the corporation's income tax return but also certain other items that are not taxable or deductible for income tax purposes. E&P is a broader measure used to determine a corporation's ability to pay dividends out of its profits.

Only Income and Deductions Included on a Corporation's Income Tax