Module 3: Earnings & Profits
Format APA
Volume of 1 page (275 words)
Assignment type : Coursework
Description
Pebble Corporation, an accrual basis taxpayer, has struggled to survive since its formation, six years ago. As a result, it has a deficit in accumulated E & P at the beginning of the year of $340,000. This year, however, Pebble earned a significant profit; taxable income was $240,000. Consequently, Pebble made two cash distributions to Martha, its sole shareholder: $150,000 on July 1 and $200,000 December 31. The following information might be relevant to determining the tax treatment of the distributions.
This year’s taxable income included a net operating loss carryover of $50,000.
The corporation’s Federal income tax liability is $72,000 for the year.
Pebble paid nondeductible fines and kickbacks of $10,000. The company also paid nondeductible life insurance premiums of $22,000.
The cash surrender value of the corporate-owned life insurance policies increased by $11,000 during the year.
The company sold a piece of equipment during the year and reported a § 1231 gain of $105,000 and recapture income under § 1245 of $35,000. There were no other § 1231 transactions during the year, but the corporation did have a capital loss carryforward of $30,000.
MACRS depreciation exceeds E & P depreciation by $14,000. In addition, an election under § 179 was made this year for $18,000 of assets.
a. Compute Pebble’s E & P for the year.
b. What are the tax consequences of the two distributions made during the year to Martha (her stock basis is $74,000)?
[wpadm-chat]
Sample Feedback from students
Thank you for the service. You provide High quality articles and research papers. I give you 5 star rating.
AMAZING WORK! This writer did not do any plagiarism and did what I asked exactly for the APA format! I will definitely use this writer again for another paper! Thank you so much for you service ! AMAZING Job!
This is an excellent writer She gave me the assignment many hours before the deadline. It would take only a couple minute for her to respond to my questions and concerns. I had a great experience.
Excellent work. this is my fourth order and its an excellent paper. All the requirements and instructions I provide were well addressed. Excellent Writer. Topic: The Effects of Herbs and Spices on Blood Pressure – A Systematic Review
I’m impressed, I must say. Seldom do I come across a blog that’s both equally educative and engaging, and let me tell you, you’ve hit the nail on the head. The problem is an issue that not enough men and women are speaking intelligently about. I’m very happy I found this during my hunt for something.
Wow this writer did it perfect again Has written multiple papers for me and I have gotten all straight A’s! When you choose this writer you choose best quality work!
The is the best writer I have ever had All details were followed accurately, and the completed work delivered way before deadline. The quality is very good. I will place another order with you soon. Warm regards.
I checked the completed copy for "Dismantled, ornament based culture in 20th Century Vienna" . Its amazing Very well written! I am always pleased With the services you Offer.
Good work but could have been more attention to detail. I did a quick edit afterwards and found some minor punctuation errors. Other than that it was all fine.