For some reason calculating E&P always trips me up. Does someone have a general guideline or even a high level list of common items?
Here is what I have:
Negative Adjustments:
-Federal Income Tax Exp, Non-deductible fines, political contributions, meals and entert, officer life insurance premiums (corp beneficiary), other non deduct expenses
Positive Adjustments:
-Refunds of federal income tax paid,tax exempt income, NOL deduction, Life insurance proceeds where corp is beneficiary, dividend received deduction, carryovers
So basically the way I try to think of it is these are items that effect cash flow but are not necessarily reflected in taxable income–as a result we make the adjustment (positive or negative) to get a better idea of are “true” cash that way we can determine the corps ability to pay shareholders? If this was a “real world” example–is this just an internal calculation–do outside auditors place an emphasis on it?
I guess I typed most of what I need to know — but its not sticking! It's hard for me to want to add back items that I know aren't taxable–I need to get my head to separate E&P from actual taxable income!
FAR - 78
REG - 72,74,71...please just go away REG nobody likes you!
BEC - 82
AUD - Aug 16
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