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    Water's Current E&P for the Year

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

    ? For the current year, Water reports an $80,000 long-term capital loss and no capital gains.
    ? Taxable income includes $80,000 of dividends from a 10%-owned domestic corporation.
    ? Water paid fines and penalties of $6,000 that were not deducted in computing taxable income.
    ? In computing this year's taxable income, Water deducted a $20,000 NOL carryover
    from a prior tax year.
    ? Water claimed a $10,000 U.S. production activities deduction.
    ? Taxable income includes a deduction for $40,000 of depreciation that exceeds the depreciation allowed for E&P purposes.

    Assume a 34% corporate tax rate. What is Water's current E&P for this year?

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    Solution Summary

    The solution determines Water's Current E&P for the Year.