Which of the following statements best describes current earnings and profits?

Multiple Choice

• 1 Current earnings and profits is another name for a corporation's retained earnings on its balance sheet.

• 2 Current earnings and profits is a precisely defined tax term in the Internal Revenue Code and represents a corporation's economic income for the year.

• 3 Current earnings and profits is a partially defined tax concept in the Internal Revenue Code and represents a corporation's economic income for the year.

• 4 Current earnings and profits is a conceptual tax concept with no definition in the Internal Revenue Code.

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