Payroll Dictionary
Earnings and Profits (E & P)
Accumulated earnings and profits, as well as earnings and profits of the current taxable year, measure the amount of a distribution by a corporation to its shareholders which represents a dividend. The earnings and profits of a distributing corporation are not the same as net income or taxable income. They include nontaxable as well as taxable income but do not include realized gains or losses which are not recognized for income tax purposes.