Technical topics regarding tax preparation.
1-Jun-2023 9:40am
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Can a Corp have a negative accumulated E&P?
I understand the current E&P gets reduced to 0, but does accumulate E&P go below 0?
I was under the impression the accumulated E&P goes to 0, and then any distributions are a return of capital up until basis.
But can losses create a deficit?
1-Jun-2023 10:04am
Big E
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And distributions in excess of basis are capital gain income
1-Jun-2023 10:08am
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Correct.
But can deficits reduce accumulated E&P below 0?
1-Jun-2023 10:14am
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Yes. Google "Earnings and profits computation practice guide" for one of the easier to read articles on computation of E&P.
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1-Jun-2023 12:30pm
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Thanks,
I have reviewed several examples, but of course, none of them have a deficit in E&P.
I just wanted to confirm it was possible.
1-Jun-2023 12:51pm
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If you read the guide, you will find there are references about what to do if your company has positive current E&P, but a deficit in accumulated E&P carrying forward.
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