Mastering Corporate E&P Calculations and Rules: Maintaining Current Earnings and Profits Balances

Description

One of the more important, and neglected, tasks for corporate tax professionals is regular calculation of corporate E&P. A substantively different measure than either retained earnings or retained taxable income, E&P represents the amount of economic resources available for a corporation to distribute to its shareholders. Accurate accounting of a corporation’s E&P is critical in determining the appropriate tax treatment of distributions to shareholders, as well as that of many other transactions.

While the concept of E&P is relatively straightforward, the determining current and accumulated E&P involve complex and time-consuming calculations. This is especially true if E&P calculations and schedule maintenance have been neglected, as is the case with many corporations. 

Maintaining current and accurate E&P calculations can enable a company to understand the tax treatment of distributions, as well as positioning the corporation to respond to beneficial transaction opportunities.

Listen as our expert panelist provides a deep and practical examination of calculating both current and accumulated E&P, detailing the debit and credit adjustments to taxable and book income, and offering best practices on designing plans to calculate and maintain E&P schedules.