Beach Corporation, an accrual basis taxpayer, reports the following results for

Question

Beach Corporation, an accrual basis taxpayer, reports the following results for the current year:

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Income:
Gross profit from manufacturing operations ____________________$250,000
Dividends received from %25 -owned domes. corp. ______________ 20,000
Interst Income:                                                                                                                             Corporate bonds ______________________________ 10,000
Municiple bonds ____________________________________________ 12,000
Proceeds from life insurance policy on key _____________________ 100,000
employee
Section 1231 gain on sale of land ______________________________ 8,000
Expenses:
Administrative expenses ____________________________________ 110,000
Bad Debts ________________________________________________ 5,000
Depreciation:
Financial accounting__________________________________________68,000                                       Taxable income _____________________________________________ 86,000                                  Alternative depreciation system (for E&P) _______________________ 42,000                                            NOL carryover ______________________________________________ 40,000                                       Charitable contributions:                                                                                                                   Current year __________________________  8,000                                                                                     Carryover from last year _____________________________________ 3,500                                          Capital loss on sale of stock __________________________________ 1,200                                              US production activities deduction ____________________________ 1,500                                                Penalty on late payment of federal taxes _______________________ 450

a. What is Beach's taxable income and current E&P?

Explanation / Answer

Current year E&P: Income: Gross profit from manufacturing operations ____________________$250,000 +Dividends received from %25 -owned domes. corp. ______________ 20,000 +Corporate bonds ______________________________ 10,000 +Municiple bonds ____________________________________________ 12,000 -Administrative expenses ____________________________________ 110,000 -Bad Debts ________________________________________________ 5,000 -Depreciation 68000 -Capital loss on sale of stock 1200 -US production activities deduction 1,500 e&p = 106300 answer happy to help

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