25. LO.5, 6 Cougar, Inc., is a calendar year S corporation. Cougar’s Form 1120S shows nonseparately stated ordinary income of $80,000 for the year. Johnny owns 40% of the Cougar stock throughout the year. The following information is obtained from Cougar’s corporate records.

Tax-exempt interest income $ 3,000 Salary paid to Johnny (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 Refund of prior state income taxes 5,000 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)

Johnny’s beginning stock basis 32,000 Johnny’s additional stock purchases 9,000 Beginning AAA 31,000 Johnny’s loan to corporation 20,000

a. Compute Cougar’s book income or loss.

b. Compute Johnny’s ending stock basis.

c. Calculate Cougar’s ending AAA balance.