For its year ended December 31, 2018, Cupressa Corporation, an S corporation, had net income of $216,000 which included $180,000 of ordinary income from operations and a $36,000 net long-term capital gain.During 2018, a total of $90,000 was distributed to the corporation's nine equal shareholders, all of whom are on a calendar-year tax basis.For 2018, each shareholder should report:

Question

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As an S corporation, Cupressa Corporation's income and losses are passed through to its shareholders for tax purposes. In this case, the corporation had $180,000 of ordinary income and $36,000 of net long-term capital gain.

Each shareholder is entitled to a pro-rata share of the income and gain based on their ownership percentage, which is not provided in the question. However, we do know that a total of $90,000 was distributed to the nine equal shareholders, so each shareholder received $10,000 in distributions ($90,000 divided by 9 shareholders).

Therefore, each shareholder should report $20,000 of ordinary income ($180,000 divided by 9 shareholders) and $4,000 of net long-term capital gain ($36,000 divided by 9 shareholders) on their individual tax returns. The distributions received by each shareholder are not taxable because they are considered a return of their investment in the corporation.

For Its Year Ended December 31, 2018, Cupressa Corporation, an S