can you respond to this classmate with at least 50 words

Ashley Camacho,

The difference between Earnings and Profits (E&P) and taxable income lies in the definitions of both. Taxable income is a portion of an organizations profit that is subject to income taxes. This is per the tax laws of that jurisdiction. As most of us are aware, income taxes are imposed by the federal government and most states, meaning that jurisdictions for businesses vary. An example would be when looking at ones own paychecks. As most workers know, income tax rates vary per state and tax bracket. So, my state taxes that are withheld would be different after my move from Hawaii to Louisiana. Taxable income is also used to differentiate between accounting profit and earnings. A companys Earnings and Profits are a measure of the corporation's ability to pay dividends without having to return a shareholder's contribution to capital. Basically, it is the net income after a corporation pays its stockholders. So, instead of it is taxable income, it is its own measure that aids analysts in evaluating an income statement. While both sound interchangeable, it is important to be aware of their differences. Otherwise, one could get lost in evaluating a companys income correctly.