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26 August, 04:58

Manistee Corporation reported taxable income of $1,200,000 this year and paid federal income taxes of $408,000. Not included in the computation was disallowed entertainment expenses of $25,000, tax-exempt interest of $20,000, and a net capital loss of $50,000 incurred this year. Manistee is an accrual basis taxpayer. The corporation's current earnings and profits this year would be:

A. $1,200,000

B. $1,145,000

C. $787,000

D. $737,000

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  1. 26 August, 07:40
    0
    corporation current earning and profits = $737000

    Explanation:

    given data

    taxable income = $1,200,000

    paid federal income taxes = $408,000

    entertainment expenses = $25,000

    tax-exempt interest = $20,000

    net capital loss = $50,000

    solution

    we get here corporation current earning and profits that will be as

    corporation current earnings and profits = taxable income - paid federal income taxes - entertainment expenses + tax-exempt interest - net capital loss ... 1

    put here value we get

    corporation current earning and profits = $1,200,000 - $408,000 - $25,000

    + $20,000 - $50,000

    corporation current earning and profits = $737000
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