Walter Williams, a travel writer, has worked for a well-known publication for a number of years as a private contractor. Last year a friend suggested he become an S corporation, but he failed to make the election. During the current year, the business had the following income and expenses from operations:

Publication royalties ........................$125,000
Travel expenses ....................................40,000
Transportation ........................................3,000
Short-term capital loss ...........................7,000
Office expense .........................................3,000
Section 1231 gain ....................................1,000
Dividend income .....................................5,000
Interest income .......................................2,000
Charitable contribution .........................1,000
Theft loss ................................................6,000

Determine the Schedule C net income. Where are items not included in the Schedule C net income reported? How would your answers change if he had made the election to become an S corporation?