LO.4 ListCo reports the following income for the current tax year. Operations Tax-exempt interest income $92,000 19,000 60,000 Long-term capital gain ListCo holds earnings and profits (AAA for an S corporation) of $900,000 at the beginning of the year. Then ListCo distributes $200,000 in total to the owners.

a. Calculate the taxable income if ListCo is (1) a C corporation and (2) an S corporation.

b. Determine the effect of the distribution on the shareholders if ListCo is (1) a C corporation and (2) an S corporation.