PROBLEM ASSIGNMENT #1 TAX 497 SUMMER 2018 Tax III, Inc. begins year 1 with 600,000 of Accumulated Eamp;P. Determine current and accumulated Eamp;P...

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.