Meganol Company is a calendar year accrual-basis taxpayer and is in its first year of operations. Meganol Company had the following income, expense, and loss items for the current year:

Sales	$650,000
Corporate dividend (from 5% owned corporation)	60,000
Municipal bond interest	25,000
Long-term capital gain	0
Short-term capital loss	(8,000)
Cost of goods sold	320,000
Depreciation	65,000
Nondeductible fines	4,000
Advertising	7,000
Utilities	6,000
Rent	5,000

Furthermore, Meganol's liabilities (all recourse) increased from $0 on 1/1 to $300,000 on 12/31 of the current year.

1. Assume that Meganol Company is owned by Thomas as a sole proprietorship. Thomas received $2,400 per month ($28,800 in total) from Meganol Company as an owners draw. Additionally, Thomas took $55,000 out of Meganol Company near the end of the year as a partial distribution of profits. (11 points)
   1. Calculate the net business income of Meganol Company/Thomas that would be reported on Schedule C of Thomas Form 1040.
   2. How much of the $2,400 per month ($28,800 total) and the $55,000 distribution would Thomas include as taxable income on his Form 1040?
   3. What amount of Thomas's income will be subject to self-employment tax?
   4. Note that you do not need to complete Schedule C or other forms, but these form will be a useful guide in completing this portion of the assignment.