The profit and loss statement of Kitsch Ltd., an S corporation, shows $100,000 book income. Kitsch is owned equally by four shareholders. From supplemental data, you obtain the following information about items that are included in book income.
Selling expenses ($21,200)
Tax-exempt interest income 3,000
Dividends received 9,000
§1231 gain 7,000
Depreciation recapture income 11,000
Net income from passive real estate rentals 5,000
Long-term capital loss (6,000)
Salary paid to owners (each) (12,000)
Cost of goods sold (91,000)
a. The entity's nonseparately stated income is $82,000.
b. The portion of nonseparately stated income or loss for James Billings, one of the Kitsch shareholders, is $20,500.
c. What is James Billings' share of tax-exempt interest income, if any?
$
Is the income taxable to him this year?
not taxable
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