Wood Corporation was a C corporation in 2019 but elected to be taxed as an S corporation

Question:

Wood Corporation was a C corporation in 2019 but elected to be taxed as an S corporation in 2020. At the end of 2019, its earnings and profits were $15,500. The following table reports Wood Corp.’s (taxable) income for 2020 (its first year as an S corporation).

	Wood Corporation Income Statement December 31, 2020
Sales revenue	$150,000
Cost of goods sold	(35,000)
Salary to owners	(60,000)
Employee wages	(50,000)
Depreciation expense	(4,000)
Miscellaneous expenses	(4,000)
Interest income	8,000
Qualified dividend income	2,000
Overall net income	$7,000