Tax Return Problems Tax Return Problem #1 Phil Williams and Liz Johnson are 60% and shareholders, respectively, in WJ Corporation, a Subchapter S corporation. The corporation had the following activity during the year. Income Interest income Dividend income (qualified) Long-term capital gains Total Revenue Expenses: Salaries and wages (non-officers) Salaries and wages, owners & officers Depreciation (MACRS includes $9,000 179 Expense) Interest expense Taxes and licenses Meals and entertainment (100%) Auto Insurance (non-partner health) Accounting and legal Repairs Charitable contributions Payroll penalties Total Expenses Net Income S336,123 1,259 4,586 S355,426 s 47,000 125,000 41,888 5,220 15,548 15,257 5,254 6,000 2,800 1,200 2,500 $758167 S 87 759 During the year, the corporation made a distribution of S20,OOO, in total, to its shareholders. Required: Complete page 1, Schedule K, and Schedule M-1 of Form 1120-S