The Viking Corporation has the following items of income for 2016:
Operating income ........................................................ $350,000
Dividend income (12%-owned corporations) .......................... 15,000
Long term capital gains .................................................... 9,000
Short term capital gains .................................................... 3,000
Capital loss carryover from 2015 ......................................... 8,000
Charitable cash contributions ............................................ 12,000
Net operating loss carryover from 2015 ............................... 35,000
a. Calculate the corporation's 2016 taxable income and its tax liability.
b. Assume that Viking is, and always has been, an S corporation wholly owned by Fran, a single taxpayer with no other income or deductions. Will either Viking Corporation or Fran realize any tax savings, given the income and liability determined in part a? Explain.