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16 July, 21:09

This year Truckit reported taxable income of $160,000 and received $20,000 of municipal interest. Truckit paid $55,000 in entertainment expenses and $15,000 in fines and penalties Truckit had $50,000 of accumulated E&P at the beginning of the year. What is Truckit's current E&P? a) 180,000

b) 142,200

c) 110,000

d) 76,400

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  1. 16 July, 21:24
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    Since in the question, the corporate tax rate is not given, So, the current E&P would be

    = Taxable income + municipal interest - entertainment expenses - fines and penalties

    = $160,000 + $20,000 - $55,000 - $15,000

    = $110,000

    And, if we assume the corporate tax rate is 21%, so the current E&P would be

    = = Taxable income + municipal interest - entertainment expenses - fines and penalties - tax expenses

    = $160,000 + $20,000 - $55,000 - $15,000 - $160,000 * 21%

    = $76,400

    In both the methods, the answer would be different.
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