An S Corporation Reports Ordinary Income of $120,000 After Deducting

An S corporation reports ordinary income of $120,000 after deducting $20,000 for Fred's salary. Fred and his three children own the S corporation equally. The IRS determines Fred's stock transfer to his three children is not bona fide. Reasonable compensation for Fred is $40,000. How much of the S corporation's $140,000 pre-salary income must be reported by Fred?

A) $140,000
B) $100,000
C) $50,000
D) $40,000