Inc. begins year 10 with 423,000 of Accumulated E&P. Determine current and accumulated E&P…

Inc. begins year 10 with 423,000 of Accumulated E&P.  Determine current and accumulated E&P for the years 10, 11, & 12, and the tax treatment of distributions with the following data:

                                                            YEAR 10                    YEAR 11                    YEAR 12

Taxable Income (loss)                     350,000                       (150,000)                    533,000

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         100,000                       88,000                         52,000

Section 179 Expense                        100,000                       20,000                         10,000

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                       250,000

Prior Section 179 expense information:

04        $ 16,000

05        $ 31,550

06        $ 200,000

07        $ 25,000

08        $ 60,000

09        $ 30,000

There is an Installment Sale in year 10 for $3,700,000.  $2,220,000 was paid in year 10, $925,000 will be paid in year 11 and 555,000 will be paid in year 12.  The asset’s adjusted basis is $400,000.

There was an installment sale in year 8 for $1,000,000.  $500,000 was paid in year 8, $250,000 was paid in year 9, and the final $250,000 was paid in year 10.  The asset’s adjusted basis was $400,000.

 

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