Arnold Is the President of Conrad Corporation Conrad Corporation Pays $400,000 of Dividends

Arnold is the President of Conrad Corporation.Arnold owns 30% of Conrad,which is organized as an S corporation.Arnold's salary is $100,000.Conrad reports the following for the current year:
$$\begin{array} { l r } \text { Sales } & \$ 4,000,000 \\\text { Cost of goods sold } & ( 1,700,000 ) \\\text { Operating expenses } & ( 1,200,000 ) \\\text { Salaries (includes Arnold's salary) } & ( 600,000 ) \\\text { Capital loss } & \underline { ( 200,000 ) } \\\text { Net income } & \underline {\$ 300,000} \\\end{array}$$
Conrad Corporation pays $400,000 of dividends.Explain the effect of the above information on Arnold's taxable income.