For its year ended December 31, 2015, 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 2015, 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 2015, each shareholder should report:

Question

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Each shareholder should report their share of the S corporation's income, which includes both ordinary income and capital gains. In this case, the S corporation had $180,000 of ordinary income and $36,000 of net long-term capital gain, for a total of $216,000 of income.

Since there are 9 equal shareholders, each shareholder's share of the income is $24,000 ($216,000 divided by 9).

Of the $24,000, each shareholder would report $20,000 of ordinary income ($180,000 divided by 9) and $4,000 of net long-term capital gain ($36,000 divided by 9).

Therefore, the correct answer is C, as each shareholder should report $20,000 of ordinary income and $4,000 of net long-term capital gain on their individual tax returns for 2015.

For Its Year Ended December 31, 2015, Cupressa Corporation, an S