Question

A. To determine current E & P, it is necessary to add all previously excluded income items back to taxable income.

True/False
b. When calculating E & P, it is necessary to subtract certain nondeductible expenses from taxable income.
True/False
c. No adjustment to taxable income is required for the dividends received deduction and the domestic production activities deduction when determining E & P.
True/ False
d. Gains and losses from property transactions generally affect the determination of E & P only to the extent they are recognized for tax purposes.
True/False
e. Accounting methods used for determining E & P are generally more conservative than those allowed for calculating taxable income.
True/False

Answer 1

A. To determine current E & P, it is necessary to add all previously excluded income items back to taxable income. TRUE

b. When calculating E & P, it is necessary to subtract certain nondeductible expenses from taxable income. TRUE, FOR EXAMPLE NONDEDCUTIBLE MEALS AND ENTERTAINMENT EXPENSES.

c. No adjustment to taxable income is required for the dividends received deduction and the domestic production activities deduction when determining E & P. FALSE, THESE DEDUCTIONS ARE ADDED BACK TO INCOME TO DETERMINE E&P.

d. Gains and losses from property transactions generally affect the determination of E & P only to the extent they are recognized for tax purposes. TRUE, GAINS AND LOSSES DEFERRED UNDER § 1031 ONLY AFFECT E&P WHEN THEY ARE RECOGNIZED.

e. Accounting methods used for determining E & P are generally more conservative than those allowed for calculating taxable income. TRUE