Assume the following year $2$ income statement for Johnstone Corporation, which was a C corporation in year $1$ and elected to be taxed as an S corporation beginning in year $2.$ Johnstone's earnings and profits at the end of year $1$ were $$10,000.$ Marcus is Johnstone's sole shareholder, and he has a stock basis of $$40,000$ at the end of year $1.$

$\backslash$table$[[\backslash$table$[[$Johnstone Corporation$],[$Income Statement$],[$December $31,$ Year $2]]],[,$Year $2($S$],[,$Corporation$)],[$Sales revenue,$$150,000$