Question
ABC Company reported taxable income of $500,000 in 2020. This amount does not include a $5,000 nondeductible (for tax purposes) meal expense. If you start
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ABC Company reported taxable income of $500,000 in 2020. This amount does not include a $5,000 nondeductible (for tax purposes) meal expense. If you start with taxable income of $500,000 what adjustment will be necessary for the $5,000 meal expense for purposes of calculating E&P?
a. a $5,000 addition.
b. a $5,000 deduction.
c. no adjustment.
d. none of the above.
2. ABC Company reported taxable income of $500,000 in 2020. This amount included a $15,000 deduction for tax depreciation. The companys book depreciation was $12,000. If you start with taxable income of $500,000 what adjustment will you need to make for depreciation for purposes of calculating E&P?
a. a $3,000 addition. | ||
b. a $3,000 deduction. | ||
c. a $12,000 deduction. | ||
d. a $12, addition. | ||
e. none of the above. |
3. ABC Company reported current year E&P of $400,000 in 2020. This amount included a $10,000 capital gain and $16,000 capital loss. If you start with E&P of $400,000 what adjustment will you need to make for capital losses for purposes of calculating taxable income?
a. a $6,000 addition. | ||
b. a $6,000 deduction. | ||
c. no adjustment. | ||
d. none of the above. |
4. ABC Company reported current year E&P of $400,000 in 2020. This amount included a $12,000 expense for payment of an OSHA violation fine. If you start with E&P of $400,000 what adjustment will you need to make for the fine for purposes of calculating taxable income?
a. a $12,000 addition. | ||
b. a $12,000 deduction. | ||
c. no adjustment. | ||
d. none of the above. |
5. ABC Company reported current year E&P of $400,000 in 2020. This amount included $100,00 of life insurance proceeds the company received because of the death of one of its officers (the company was the beneficiary of the officers life insurance policy). If you start with E&P of $400,000 what adjustment will you need to make for the life insurance proceeds for purposes of calculating taxable income?
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a. a $100000 addition.
b. a $100,000 deduction.
c. no adjustment.
d. none of the above.
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