28. LO.1, 2 In each of the following independent situations, indicate the effect on taxable income and E & P, stating the amount of any increase (or decrease) in each as a result of the transaction. Assume that E & P has already been increased by taxable income.

Transaction

Taxable Income Increase (Decrease)

E & P Increase (Decrease)

a.

Realized gain of $80,000 on involuntary conversion of building ($10,000 of gain is recognized).

___________

___________

b.

Mining exploration costs incurred on May 1 of current year; $24,000 is deductible from current-year taxable income.

___________

___________

c.

Sale of equipment to unrelated third party for $240,000; basis is $120,000 (no election out of installment method; no payments are received in current year).

___________

___________

d.

Dividends of $20,000 received from 5% owned corporation, together with dividends received deduction (assume that taxable income limit does not apply).

___________

___________

e.

Domestic production activities deduction of $45,000 claimed in current year.

___________

___________

f.

Section 179 expense deduction of $100,000 in current year.

___________

___________

g.

Impact of current-year 179 expense deduction in succeeding year.

___________

___________

h.

MACRS depreciation of $80,000. ADS depreciation would have been $90,000.

___________

___________

i.

Federal income taxes of $80,000 paid in current year.

___________

___________