Builtrite had sales of $36,000,000 in 2011. Cost of goods sold were calculated at 65% of sales. Builtrites operating expenses were $6,000,000 which included depreciation expense. Bonds with a total par value of $12,000,000 were outstanding and had a 9% coupon rate. Builtrite received $200,000 in dividends from stock owned and paid out $600,000 in dividends to its preferred stockholders. Builtrite sold stock that it had purchased in 2008 and realized a $350,000 capital gain.

a) Calculate Builtrites taxable income and tax liability.

b) If Builtrite had also sold another stock that resulted in a $400,000 capital loss, calculate Builtrites taxable income.