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1120 returns

Earnings and Profits (E&P)

This template calculates current and accumulated E&P, the amount of the dividends paid from E&P, and any dividend paid in excess of E&P.  E&P determines the maximum amount that must be recognized as dividends if distributed to shareholders [IRC Sec. 316(a)]. See PPC’s 1120 Deskbook, Key Issue 25D.

Entering Information

All of the information needed to produce the computation is entered on the Input worksheet.  The yellow highlighted cells are calculated fields, and no data should be entered in these cells.  Gray cells are not calculated fields, but data should not be entered in these cells.

Enter the following information:

  • Current tax year (This field defaults to the balance sheet date entered in the heading, but can be overridden.)
  • Increases to E&P:
- Lines a. through r. represent the most common adjustment to E&P.  Other increases can be added on line s.
- Enter 100 percent of the IRC Sec. 179 amount.  (An 80 percent allowed amount is a calculated amount.)
  • Decreases in E&P:
- The decreases listed are the most common.   Others can be added on line p.  
- Enter 100 percent of the IRC Sec. 179 amount.  (A 20 percent required amount is a calculated amount.)
  • Total distributions made during the year
  • Accumulated E&P at the beginning of the year
  • Adjustments to beginning accumulated (Additional lines can be added in this area, as needed.)