Peacock Furniture, Inc., is a calendar year S corporation. Peacocks Form 1120S shows nonseparately stated ordinary income of $80,000 for the year. Caroline owns 40% of the Peacock stock throughout the year. The following information is obtained from the corporate records.

Show Work for A-C.

Tax-exempt interest income $3,000

Salary paid to Caroline (52,000)

Charitable contributions (6,000)

Dividends received from a non-U.S. corporation 5,000

Short-term capital loss (6,000)

Depreciation recapture income 11,000

Cost of goods sold (72,000)

Long-term capital loss (7,000)

Administrative expenses (18,000)

Long-term capital gain 14,000

Selling expenses (11,000)

Carolines beginning stock basis 32,000

Carolines additional stock purchases 9,000

Beginning AAA 31,000

Carolines loan to corporation 20,000

1. Compute Peacocks book income or loss.

2. Compute Carolines ending stock basis.

C. Calculate Peacocks ending AAA balance.