Grand River Corporation reported taxable income of $600,000 in year 1 and paid federal income taxes of $155,000. Not included in the computation was a disallowed meals expense of $3,000, tax-exempt income of $2,000, and deferred gain on an installment sale of $35,000. The corporation's current earnings and profits for year 1 would be:

$444,000

Explanation:

current earnings and profits = (taxable income - income taxes) - meals expense + tax exempt income = ($600,000 - $155,000) - $3,000 + $2,000 = $444,000

Disallowed expenses are expenses made by an individual or company that the IRS doesn't allow to be deducted, e.g. meals. Tax exempt income is income that is not taxed by the IRS, e.g. DRD includes at least 70% of dividends received.

Deferred gains or unearned revenues are considered a liability and are not included in the income statement.

answer; ///i believe that the correct answer is (a) it is the means by which a person earns money;

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explanation: