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Determining Earnings and Profits for Separate Corporations and Consolidated Groups (DEPC)
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Learn how to determine the taxability of distributions made from a stand-alone corporation or common parent of a consolidated group to its shareholders. The concept of a corporation's "earnings and profits" was first introduced into federal tax law with the Revenue Act of 1916, yet in the near century that's followed the term has never been formally defined by statute.

6/22/2017
When: Thursday, June 22, 2017
11:00 AM - 1:00 PM
Where: Webinar/Webcast
United States
Presenter: Tony Nitti, CPA
Contact: April Deneault
801-466-8022


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Description:

Learn how to determine the taxability of distributions made from a stand-alone corporation or common parent of a consolidated group to its shareholders.

The concept of a corporation's "earnings and profits" was first introduced into federal tax law with the Revenue Act of 1916, yet in the near century that's followed the term has never been formally defined by statute. Instead, earnings and profits has been indirectly defined through its application and modification by various sections of the Code to represent the measure of a corporation's ability to make distributions to its shareholders out of earnings, rather than by returning shareholders' contributions to capital. As opposed to a corporation's taxable or "book" income -- which are driven by tax policy and financial accounting considerations, respectively -- the computation of earnings and profits is concerned primarily with quantifying the corporation's economic income, without regard to such considerations.

A corporation's earnings and profits determines the taxability of distributions made to its shareholders. Code Section 316 defines a "dividend" as any distribution of property made by a corporation out of current or accumulated earnings and profits. In turn, Code Section 301(c) provides that any distribution constituting a dividend must be included in the gross income of the shareholder, while amounts distributed in excess of those considered a dividend are first treated as a nontaxable return of capital to the extent of the shareholder's stock basis, with any remaining distribution treated as a gain from the sale of the stock, resulting in capital gain.

Presented by tax expert Tony Nitti, CPA, MST, this informative and convenient two-hour online CPE webinar will take you through the reasons for computing earnings and profits, the adjustments necessary to convert taxable income to earnings and profits, and how to determine the sourcing of distributions for a stand-alone corporation. Nitti will also examine the unique nuances necessary to determine earnings and profits for a consolidated group of corporations. All tax professionals in industry or in public practice with business clients will benefit from this webinar. Time will be provided for you to ask questions directly to Mr. Nitti during the program.

Subjects:

  • The reasons for computing a corporation's earnings and profits
  • Defining earnings and profits
  • Using earnings and profits to determine the taxability of a corporation's distributions to its shareholders
  • Increases and decreases to taxable income necessary to compute earnings and profits
  • Decreases to earnings and profits for distributions and redemptions
  • The sourcing rules for distributions made from earnings and profits
  • The tier-up process necessary to compute earnings and profits for a consolidated group
  • The effect of intercompany distributions on the earnings and profits of consolidated group members

Objectives:

  • Describe the corporate concept of earnings and profits
  • Identify common adjustments necessary to compute earnings and profits
  • Determine a corporation's earnings and profits and the resulting taxability of distributions made to the corporation's shareholders

Design For:

Corporate tax staff, CPAs, EAs, return preparers, tax attorneys, and other tax professionals who advise businesses will benefit from this insightful webinar

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