answer question a, b, and c

Hudson Inc. is an S-Corp that reports the following balances at the beginning of the tax year:

AAA	$ 40,000
AEP	15,000
OAA	4,500

In addition it reports the following current year activity:

Tax-Exempt Interest Income	$ 3,500
Sales Revenues	120,000
Dividend Income from a 20% owned Corporation	25,000
Cost of Goods Sold	(70,000)
Short-term Capital loss	(30,000)
Salaries paid to the owners	(40,000)
Investment Interest Expense	(10,000)
Cash Distribution	(60,000)

a. Using the information from the problem parameters, what is the balance in AAA before the allocation of any distributions?

b. What is the ending balance in AEP?

c. Assume the S-corp has a single shareholder who is a taxable individual. What is the effect on the shareholders current year taxable income as a result of the current year activity? You can assume that Hudson is their only investment that generates capital gains or losses, they itemize their deductions, and generate significant amounts of interest income from other investments.