Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $10,000 from Falcons Corporation.

Falcons Corporation (an S Corporation)
Income Statement
December 31, Year 1 and Year 2
	Year 1	Year 2
Sales revenue	$ 320,000	$ 450,000
Cost of goods sold	(41,000)	(62,000)
Salary to owners Julio and Milania	(40,000)	(80,000)
Employee wages	(30,000)	(60,000)
Depreciation expense	(17,000)	(34,000)
Section 179 expense	(30,000)	(50,000)
Interest income (related to business income)	10,000	18,500
Municipal bond income	1,700	4,400
Government fines	0	(2,000)
Overall net income	$ 173,700	$ 184,900
Distributions	$ 20,000	$ 50,000

Problem 22-52 Part c (Algo)

c. Complete Julios 1120-S, Schedule K-1, for year 1.