For each of the following transactions, indicate wheth-er a special adjustment must be made in computing R Corporation’s current E&P. Answer assuming that E&P has already been adjusted for current taxable income.During the year, the corporation paid estimated Federal income taxes of $25,000 and estimated state income taxes of $10,000.The corporation received $5,000 of interest income from its investment in tax-exempt bonds.The corporation received a $10,000 dividend from General Motors Corporation.The corporation purchased machinery for $9,000 and expensed the entire amount in accordance with Code § 179.The corporation reported a § 1245 gain of $20,000. f. The corporation had a capital loss carryover of $7,000 from the previous year. This year the corporation had capital gains before consideration of the loss of $10,000.

E & P is Earnings and Profit. It is the measure of the ability of the corporation to make…

Answered: indicate wheth-er a special adjustment…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter17: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 32P

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For each of the following transactions, indicate wheth-er a special adjustment must be made in computing R Corporation’s current E&P. Answer assuming that E&P has already been adjusted for current taxable income.

During the year, the corporation paid estimated Federal income taxes of $25,000 and estimated state income taxes of $10,000.
The corporation received $5,000 of interest income from its investment in tax-exempt bonds.
The corporation received a $10,000 dividend from General Motors Corporation.
The corporation purchased machinery for $9,000 and expensed the entire amount in accordance with Code § 179.
The corporation reported a § 1245 gain of $20,000. f. The corporation had a capital loss carryover of $7,000 from the previous year. This year the corporation had capital gains before consideration of the loss of $10,000.

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