C:4-28 Current E&P Computation. 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 loss incurred last year. Taxable income includes a deduction for $40,000 of depreciation that exceeds the de- preciation allowed for E&P purposes