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This year, Jolt Inc. reported $40,000 of taxable income before any charitable contribution deduction. Jolt contributed...

This year, Jolt Inc. reported $40,000 of taxable income before any charitable contribution deduction. Jolt contributed $10,000 this year to Goodwill Industries, a public charity. Compute the company’s current E&P.

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Answer #1

Taxable income before charitable contribution deduction is $40,000

Charitable contribution limited to 10% of taxable income that is 10% of 40000 = $4,000

So, new Taxable Income $36,000

Federal income taxes(@15%) = $5,400

For E&P calculation Current E&P = taxable income - carryover charitable contribution - income tax

Taxable income $36,000

Carryover Charitable contribution (6,000)

Federal income taxes (5,400)

Current E&P $24,600

So company's current E&P is $24600

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