Question

Grand River Corporation reported taxable income of $600,000 in 20X3 and paid federal income taxes of $204,000. Not included in the computation was a disallowed meals and entertainment expense of $2,200, tax-exempt income of $1,200, and deferred gain on an installment sale of $26,000. The corporation's current earnings and profits for 20X3 would be:

Answer 1

$625,000

Step-by-step explanation:

The Grand River Corporation current earnings and profits for 20X3 would be calculated as follow:

Taxable income $600,000

Less: Disallowed meals and entertainment expense of ($2,200)

Add: Tax-exempt income of $1,200

Add: Deferred gain on an installment sale of $26,000

Corporation current earnings and profit: $625,000