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PROBLEM ASSIGNMENT #1
TAX 497 SUMMER 2018
Tax III, Inc. begins year 1 with 600,000 of Accumulated E&P. Determine current and accumulated E&P for the end of years 1, 2, & 3 with the following data:
YEAR 1 YEAR 2 YEAR 3
Taxable Income(loss) 450,000 (150,000) 300,000
Installment Sale in year 1 AR 1,000,000, adjusted basis 600,000
Taxes paid 140,000 0 93,000
Insurance Premiums 100,000 120,000 95,000
Life Insurance Death benefit 0 250,000 100,000
Tax Exempt Income 85,000 20,000 50,000
Total Meal & Entertainment 20,000 26,000 12,000
Section 179 Expense 100,000 20,000 100,000
Capital Loss Cf (75,000)
Capital Gain 25,000 55,000 10,000
Capital Loss (35,000)
NOL Carryforward 140,000
Distributions 1,000,000 200,000 210,000
Show calculations using Excel spreadsheet. For each year show end of year E&P, beginning of year Accumulated E&P, current year E&P, and treatment of distribution.
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