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 Year 2 Sales revenue $ 300,000 $ 430,000 Cost of goods sold (40,000 ) (60,000 ) Salary to owners Julio and Milania (40,000 ) (80,000 ) Employee wages (25,000 ) (50,000 ) Depreciation expense (20,000 ) (40,000 ) Section 179 expense (30,000 ) (50,000 ) Interest income (related to business) 12,000 22,500 Municipal bond income 1,500 4,000 Government fines 0 (2,000 ) Overall net income $ 158,500 $ 174,500 Distributions $ 30,000 $ 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).