Accumulated Earnings and Profits
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Definition of 'Accumulated Earnings and Profits'
An accounting term applicable to stockholders of closely held businesses. Accumulated earnings and profits are a company's net profits after deducting distributions to the stockholders. This is calculated as of the beginning of the year.
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Investopedia explains 'Accumulated Earnings and Profits'
Accumulated earnings and profits are similar to retained earnings, because both terms refer to the net profits of a company after shareholder distributions. However, accumulated earnings and profits also can include reserve accounts, which are not deductible and which can be included when computing taxable earnings.
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