The profit and loss statement of Kitsch Ltd., an S corporation, shows $100,000 book income. Kitsch is owned equally by four shareholders. From supplemental data, you obtain the following information about items that are included in book income. 

Selling expenses................................................($21,200) 

Tax-exempt interest income.................................3,000 

Dividends received..................................................9,000 

§ 1231 gain................................................................ 7,000 

Depreciation recapture income........................11,000 

Net income from passive real estate rentals...5,000 

Long-term capital loss...........................................(6,000) 

Salary paid to owners (each).............................(12,000) 

Cost of goods sold................................................(91,000)

a. Compute Kitsch’s nonseparately stated income or loss for the tax year. 

b. What would be the share of this year’s nonseparately stated income or loss items for James Billings, one of the Kitsch shareholders? 

c. What is James Billings’s share of tax-exempt interest income, if any? Is the income taxable to him this year?