Question

Abbot Corporation reported a net operating loss of $400,000 in 20X3, which the corporation elected to carry forward to 20X4. Included in the computation of the taxable loss was regular depreciation of $100,000 (E&P depreciation is $40,000), first-year expensing under §179 of $50,000, and a dividends received deduction of $10,000.

The corporation's current E&P for 20X3 would be:

A. ($290,000)B. ($330,000)C. ($400,000)D. ($490,000)

Answer 1

Option A is correct one.

$290,000

Step-by-step explanation:

= ($ 400,000)-$60,000-$ 40,000- $ 10,000

= $290,000

The first year expenses Under section 179 must be captilize and amortize in 5 year ($10,000 per year)