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

Computing Current and Accumulated E&P Schedules and Adjustments

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, August 18, 2015

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Course Materials

This course will provide corporate tax professionals and advisers with detailed and advanced practical guidance on the calculation of a corporation’s earnings & profits (E&P). The panelist will discuss the accounting rules and principles for calculating both current and accumulated E&P, detailing current increases and decreases to E&P, adjustments for depreciation differences, effects of distributions on E&P, and the tax impact of transactions affecting E&P.

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. 

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Outline

  1. Definition of E&P and where it applies
  2. Current E&P calculations
    1. Increases to E&P
    2. Decreases to E&P
    3. Adjustments for depreciation differences
  3. Effects of distributions on E&P
  4. Tax treatment of transactions and events dependent on E&P
  5. Accumulated E&P analysis
  6. Workpaper methodology for calculating E&P and maintaining schedules

Benefits

The speaker will address these and other key points:

  • The differences between retained earnings and E&P
  • How to calculate current year E&P, with discussion of increases and decreases to E&P
  • How to calculate accumulated E&P and what information is needed for calculations
  • Examples of tax treatment of distributions under various E&P scenarios

Faculty

Jason W. Malinowski
Jason W. Malinowski
Tax Director
PricewaterhouseCoopers

Mr. Malinowski leads a national team that specializes in Stock Basis, Earnings & Profits (“E&P”),...  |  Read More

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