Gator Incorporated reported taxable income of $1,500,000 this year and paid federal income taxes of $500,000. Included in the company's computation of taxable income is a $98,500 gain from the sale of a depreciable asset with an income tax basis of $197,000. The income tax basis of the asset was $197,000. The E&P basis of the asset using the alternative depreciation system was $339,900. Compute the company's current E&P. Note: Negative amount should be indicated with a minus sign. Answer is complete but not entirely correct. Taxable income $1,500,000 Federal income taxes (500,000) ☑ Regular tax gain from sale of asset (98,500) E&P loss from sale of asset ° (44,400) Current E&P $ 857,100
Gator Incorporated reported taxable income of $1,500,000 this year and paid federal income taxes of $500,000. Included in the company's computation of taxable income is a $98,500 gain from the sale of a depreciable asset with an income tax basis of $197,000. The income tax basis of the asset was $197,000. The E&P basis of the asset using the alternative depreciation system was $339,900. Compute the company's current E&P. Note: Negative amount should be indicated with a minus sign. Answer is complete but not entirely correct. Taxable income $1,500,000 Federal income taxes (500,000) ☑ Regular tax gain from sale of asset (98,500) E&P loss from sale of asset ° (44,400) Current E&P $ 857,100
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Gator Incorporated reported taxable income of $1,500,000 this year and paid federal income taxes of $500,000. Included in the
company's computation of taxable income is a $98,500 gain from the sale of a depreciable asset with an income tax basis of $197,000.
The income tax basis of the asset was $197,000. The E&P basis of the asset using the alternative depreciation system was $339,900.
Compute the company's current E&P.
Note: Negative amount should be indicated with a minus sign.
Answer is complete but not entirely correct.
Taxable income
Federal income taxes
Regular tax gain from sale of asset
E&P loss from sale of asset
Current E&P
$ 1,500,000
(500,000) x
(98,500)
(44,400)
$ 857,100
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