Lesson 5A In Class Exercise 

Water Corporation reports $500,000 of taxable income for the current year.  The following additional information is available:

1. W reported an $80,000 long term capital loss this year.  It reported no capital gains this year.

2.  Taxable income included $80,000 of dividends from a 10% owned domestic corporation.

3.  W paid fines and penalties of $6,000 that were not deducted in computing taxable income.

4.  W deducted a $30,000 NOL carryover from a prior tax year in computing this year’s taxable income.

5.  Taxable income includes a deduction for $40,000 of depreciation in excess of what is allowed for E&P purposes.

What is W’s current E&P for this year?  Assume a 34% tax rate.