Dauphin Corporation has taxable income of $600,000 in the current year. In the prior year, Dauphin took a Section 179 deduction for $100,000 but took no Section 179 deductions in the current year for tax purposes.

For tax purposes, regular depreciation was $30,000 in the current year but depreciation for book and E&P purposes was only $20,000. Dauphin had $20,000 of capital gains but $30,000 of capital losses in the current year. Finally, the company paid $126,000 of income taxes this year.

Dauphin starts the year with $400,000 in accumulated E&P and distributes $100,000 of cash dividends during the year.

After all of these events, accumulated E&P equals:

	$764,000
	$880,000
	$754,000

Answer rating: 100% (QA)

Answer Solution Capital gain 10000 net Tax saving on above 1500 Net tax liab ... View the full answer