Reference no: EM132783539

Calculating Taxable Income and E&P Fill in the blank:

Z corporation has the following income and expenses and operates on a cash basis:

Gross profit of $20,000

Salaries of $10,000

Tax-exempt interest of $2,000

Dividends received from X corporation of $5,000

Dividends received deduction of $2,500

Depreciation under Section 168(a) of $6,000

A long term capital gain of $2,500

A long term capital loss of $5,000

A long term capital loss carryforward of $2,000

Federal income taxes paid of $1000

Note that depreciation would have only been $4,000 if the Section 168(g)(2) alternative depreciation system was used.

Question 1: Z corporation's taxable income is equal to $ -blank-.

Question 2: Z corporation's current earnings and profits are equal to $ -blank-. To calculate that starting from taxable income, X corporation must add $ -blank- in tax exempt interest, $ -blank- for dividends received, and a net $-blank- of depreciation. It also must subtract $ -blank- in long term capital losses and $ -blank-in federal income taxes paid.