Sales $ 450,000 110,000 15,000 1,000 36,000 Cost of goods sold Dividends on corporate investments Tax-exempt interest income Sec. 1245 gain (recapture) on equipment sale Sec. 1231 gain on equipment sale Long-term capital gain on stock sale Long-term capital loss on stock sale Short-term capital loss on stock sale Depreciation 6,000 13,000 10,000 5,000 20,000 Salary to Barb 26,000 Business meals expenses 2,400 Interest expense on loans allocable to: Business debt 28,000 Stock investments 5.800 Mark and Barb are equal shareholders in MB Corporation, an S corporation. The corporation, Mark, and Barb are calendar year taxpayers. The corporation has been an S corporation during its entire existence and thus has no accumulated E&P. The shareholders have no loans to the corporation. The corporation incurred the following items in the current year: E: (Click the icon to view the items.) Read the requirements. -..-. Requirement a. Compute the corporation's ordinary income and separately stated items. Begin by computing the corporation's ordinary income. Minus: Gross profit Plus: Minus: Ordinary expenses S corporation ordinary income 36,000 6,000 13,000 Sec. 1245 gain (recapture) on equipment sale Sec. 1231 gain on equipment sale Long-term capital gain on stock sale Long-term capital loss on stock sale Short-term capital loss on stock sale Depreciation Salary to Barb 10,000 5,000 20,000 26,000 Business meals expenses 2,400 Interest expense on loans allocable to: Business debt 28,000 Stock investments 5,800 16,000 Tax-exempt bonds Principal payment on business loan 5,000 Charitable contributions 800 Distributions to shareholders ($17,000 each) 34,000 a. Compute the corporation's ordinary income and separately stated items. b. Show Mark's and Barb's shares of the items in Part a. c. Compute Mark's and Barb's ending stock bases assuming their beginning balances are $80,000 each. When making basis adjustments, apply the adjustments in order according to Sec. 1367(a)