The income statement for Central Corporation, an S corporation, reports the following:
Sales........................................................................$260,000
Cost of goods sold...................................................(60,000)
Repair expense...........................................................(5,000)
Depreciation expense..............................................(20,000)
Salary expense..........................................................(30,000)
Long-term capital losses..........................................(15,000)
Charitable contributions............................................(5,000)
Sec. 1231 losses..........................................................(8,000)
Net income per tax books....................................$117 ,000
a. What is Central’s ordinary income (or loss) for the year?
b. Which of the above items appear as separately stated items on Schedule K?
c. Carol owns 50% of Central’s stock, which has a $75,000 basis (before taking into account any of the items listed above). What is Carol’s stock basis after all adjustments for Carol’s share of Central’s ordinary income or loss and separately stated items?