Question

Rose Corporation (a calendar year taxpayer) has taxable income of $300,000, and its financial records reflect the following for the year.
Federal income taxes paid $110,000
Net operating loss carryforward deducted currently 70,000
Gain recognized this year on an installment sale from a prior year 44,000
Depreciation deducted on tax return (ADS depreciation would have been $10,000) 40,000
Interest income on lowa state bonds 8,000
Rose Corporation's current E & P is:______
a. $254,000
b. $214,000.
c. $194,000.
d. $104,000.
e. None of the above.

Answer 1

Answer:

a. $254,000

Explanation:

                 Jaquelin Corporation

Particulars                                                Amount

Taxable Income                                       $300,000

Add: Net operating loss carry                 $70,000

forward deducted currently

Interest Income on low state bond         $8,000

Depreciation deducted on tax return     $40,000

Less:  Federal income Tax                      (-$110,000)

ADS depreciation would have been      (-$10,000)

Gain recognized this year on an             (-$44,000)

installment sale from a prior year

Current E & P                                           $254,000