a calendar year s corporation rsquo s profit and loss statement shows net profits of 699240

A calendar year S corporation’s profit and loss statement shows net profits of $90,000 (book income). The corporation is owned equally by three shareholders. From supplemental data, you obtain the following information about items included in the book income.

Tax exempt interest income

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$ 2,000

Dividends received

9,000

§ 1231 gain

6,000

Depreciation recapture income

12,000

Recovery of bad debts

4,000

Short term capital loss

(6,000)

Salary to owners (each)

(10,000)

Cost of goods sold

(95,000)

Administrative expenses

(4,500)

Selling expenses

(21,200)

Distribution to shareholders

(6,000)

a. Compute the entity’s no separately computed income or loss.

b. What would be the portion of taxable income or loss for Chang, one of the shareholders?

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