Question

Madison corporation reported taxable income of $400,000 in 20x3 and accrued federal income taxes of $136,000. Included in the computation of taxable income was regular depreciation of $200,000 (eandp depreciation is $60,000) and a net capital loss carryover of $20,000 from 20x2 utilized in 20x3. The corporation's current earnings and profits for 20x3 would be:

Answer 1

Answer:

for the year 20X3:

Particulars Amount ($)

Taxable income 400,000

Less: Federal income taxes 136,000

Depreciation disallowed 140,000

Net capital loss carryover 20,000

Current earnings and profits 424,000

Table (1)

Therefore, The current earnings and profits for the year 20X3 amounts to $424,000.