1) Boxer Corporation buys equipment in January of the current year with a 7-year class life for $15,000. The corporation expensed the $15,000 under Sec. 179. The deduction in the year of purchase for E&P purposes due to the acquisition and expensing of the equipment is
2) Identify which of the following statements is false.
A. The function of E&P is to provide a measure of a corporation’s economic ability to pay dividends.
B. At formation, a corporation’s E&P depends on the amount of capital contributed by the shareholders.
C. Adjustments to taxable income when computing E&P do not include tax exempt interest.
D. For E&P dividend distribution purposes, property as defined in Sec. 317(a) includes money.
3) Identify which of the following statements is true.
A. Section 179 property must be expensed ratably over a 5-year period when computing E&P.
B. Losses on property sales to related parties are not deductible when computing E&P.
C. Distributions made out of accumulated E&P are allocated ratably between multiple distributions made during the tax year.
D. All are false.
4) Current E&P does not include
A. tax-exempt interest income
B. life insurance proceeds where the corporation is the beneficiary
C. federal income tax refunds from prior years
D. All of the these are included
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