Julio and Milania are owners of Falcons Corporation, an s corporation. They each own 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $15,000 from Falcons Corporation. Falcons Corporation (an s Corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Sales revenue $300,000 Cost of goods sold (40,000) Salary to owners Julio and Milania (40,000) Employee wages (25,000) Depreciation expense (20,000) Section 179 expense (30,000) Interest income (related to business) 12,000 Municipal bond income 1,500 Government fines Overall net income $ 158,500 Distributions $ 30,000 Year 2 $430,000 (60,000) (80,000) (50,000) (40,000) (50,000) 22,500 4,000 (2,000) $174,500 $ 50,000 Problem 22-52 Part a a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis). Amount Allocated to Julio Allocated to Milania Ordinary Income