Falcon, Inc., is a calendar-year-end S corporation owned equally by two shareholders, Jennifer Sullivan and Marvin Darby. Falcon reports its income and expenses on the accrual method of accounting. Falcon has always been an S corporation and has no debt. Falcon's controller has provided information for the completion of Falcon's Year 4 Form 1120-S, U.S. Income Tax Return for an S Corporation. A copy of Falcon's income statement for the year ended December 31, Year 4, and additional information related to Falcon and its shareholders can be found in the exhibits.

Required:

 Review the documents provided by Falcon's controller and assist in the preparation of Form 1120S. 

Enter the appropriate amount in the associated cell. If the amount is zero, enter a zero (0). Enter income and gains as positive values and losses and expenses as negative values using a leading minus (-) sign.

Form 1120-S information		Income, gain, (loss), or (expense)
1. Falcon's Year 4 ordinary business income (loss) to be reported on Form 1120-S
2. Sum of Falcon's Year 4 separately stated items of taxable income and deductible expense to be reported on Form 1120-S, Schedule K, Shareholders' Pro Rata Share Items
3. Falcon's Year 4 nondeductible expenses
4. Falcon's December 31, Year 4, accumulated adjustment account balance
5. Jennifer Sullivan's shareholder tax basis at December 31, Year 4
Falcon, Inc., accumulated adjustment account balance at January 1, Year 4	$100,000
Total distributions to shareholders during Year 4 (distributed equally)	30,000
Jennifer Sullivan’s shareholder tax basis at January 1, Year 4	60,000
Marvin Darby’s shareholder tax basis at January 1, Year 4 Falcon, Inc Income Statement For the year ended December 31, Year 4 Sales $1,200,000 Cost of goods sold 500,000 Gross profit $ 700,000 Salaries and wages $ 203,000 Repairs and maintenance 10,000 Depreciation expense 8,000 Charitable contributions 5,000 Payroll taxes 18,000 Penalties and fines 2,000 Business insurance 9,000 Total expenses $ 255,000 Income before other income (expense) $ 445,000 Other income (expense) Bank interest income $ 1,000 Capital loss on sale of land (20,000) Total other income (expense) $ (19,000) Net income $ 426,000 The MACRS depreciation on our assets was $20,000 for Year 4. We did not purchase any new assets in Year 4. The capital loss is for the sale of land used in our trade or business to an unrelated third party. The penalties and fines are for the late payment of payroll taxes.	75,000