Assume Congress enacts a law that says businesses may not deduct more than 20% of their gross income as advertising expenses in any tax year. If a business's advertising expenses exceed 20% of gross income, the excess is not currently deductible but may be carried forward indefinitely, subject to the same limit in subsequent years. Congress did not indicate how the new law would affect earnings and profits. Based on the way that similar items are treated under the E&P rules, the nondeductible portion of advertising expenses should:

A. Never reduce E&P

B. Reduce E&P when actually deducted

C. Reduce E&P in the year incurred and be added back to taxable income in calculating E&P in the year actually deducted

D. None of the above