RST business entity reported the following items during the current year:
Dividends from 25%-owned domestic corporation …………………… $ 19,000
Municipal bond interest received ………………………………………18,000
Corporate bond interest received ………………………………………29,000
Gain on land contributed by Karena …………………………………...40,000
Operating profit (excluding depreciation)b ……………………………. 120,000
MACRS depreciation………………………………………………….36,000
Sec. 1245 gain (depreciation recapture) ……………………………….. 5,000
Sec. 1231 loss ………………………………………………………….28,000
Long-term capital losses ………………………………………………. 4,000
Short-term capital losses ………………………………………………. 5,000
Charitable contributions ………………………………………………..23,000
Investment interest expense (related to General Electric bonds) ……….16,000
Salary (guaranteed payment) ……………………………………………37,000
a Karen held the land as an investment prior to contributing it to RST business entity three years ago in exchange for her ownership interest. When Karen contributed the land, it had a basis of $15,000 and a FMV of $40,000. RST sold the land in the current year for $55,000. RST business entity held the land as an investment. Assume that Sec. 351 applied to any corporate formation transaction.
 b Assume that qualified production activities income is $47,000 and that operating profit includes sufficient W-2 wages so as not to be a limiting factor.
a. What is the corporate taxable income and income tax liability for the current year if RST is taxed as a C corporation?
b. What is the ordinary income and separately stated items for the current year if RST elects to be an S corporation? Assume that RST has never operated as a C corporation.
c. What are the ordinary income and separately stated items if RST is treated as a general partnership?