Required information

Problem $11-52$

$[$The following information applies to the questions displayed below.$]$

Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns $50$ percent of Falcons Corporation. In year $1,$ Julio and Milania each received distributions of $$15,000$ from Falcons Corporation.

Falcons Corporation $($an S Corporation$)$

Income Statement

December $31,$ Year $1$ and Year $2$

Year $1$ Year $2$

Sales revenue $ $300,000$ $ $430,000$

Cost of goods sold $(40,000)(60,000)$

Salary to owners Julio and Milania $(40,000)(80,000)$

Employee wages $(25,000)(50,000)$

Depreciation expense $(20,000)(40,000)$

Section $179$ expense $(30,000)(50,000)$

Interest income $($related to business income$)12,00022,500$

Municipal bond income $1,5004,000$

Government fines $0(2,000)$

Overall net income $ $158,500$ $ $174,500$

Distributions $ $30,000$ $ $50,000$ a$.$ What amount of ordinary income and separately stated items are allocated to them for year $1$ based on the information above? Assume that Falcons Corporation has $$200,000$ of qualified property $($unadjusted basis$).$

b$.$ Complete Falcons's Form $1120-$S$,$ Schedule K$,$ for year $1.$

c$.$ Complete Julio's Form $1120-$S$,$ Schedule K$-1,$ for year $1.$

d$.$ What amount of ordinary income and separately stated items are allocated to them for year $2$ based on the information above? Assume that Falcons Corporation has $$200,000$ of qualified property $($unadjusted basis$).$