Transaction Taxable Income Increase (Decrease) E&P Increase
1. Realized gain of $ 50,000 on involuntary conversion of building ($ 30,000 of gain is recognized)
2. Mining exploration costs incurred on 1st June of the current year; $24,000 is deductible from current-year taxable income
3. Sale of equipment to unrelated third party for $300,000; basis is $200,000 (no election out of installment method; no payments are received in the present year).
4. Dividends of $35,000 received from 5 percent-owned corporation, together with dividends received deduction (suppose taxable income limit does not apply).
5. Domestic production activities deduction of $55,000 is claimed in present year.
6. Section 179 expense deduction of $45,000 in current year.
7. Impact of present-year section 179 expense deduction for previous item in succeeding year.
8. MACRS depreciation of $80,000. ADS depreciation could have been $88,000.
9. Federal income taxes paid in the present year of $52,000