Salem Inc Is an Electing S Corporation with Current Year Operating

Multiple Choice

Salem Inc. is an electing S corporation with current year operating income of $300,000. The $300,000 does not include the amount it realized on the sale of a building for $330,000. The building was purchased in 2004 for $250,000 and $20,000 in straight-line depreciation had been taken on the building up to the date of its sale. How should Salem Inc. report these results to its shareholders?

A) Operating income of $320,000 and Section 1231 gain of $80,000.
B) Operating income of $400,000.
C) Operating income of $304,000 and Section 1231 gain of $96,000.
D) Operating income of $380,000 and unrecaptured Section 1250 gain of $20,000.
E) Operating income of $300,000 and Section 1231 gain of $80,000 and unrecaptured Section 1250 gain of $20,000.