Fireball Corporation is an S corporation.Leyla owns all of the stock.During the current year Fireball earned taxable income of $500,000 and paid a $300,000 distribution to Leyla.Which of the following statements is correct?
A)Fireball will pay corporate income tax on its earnings,and Leyla will paid individual income tax on the distribution.
B)Only Fireball will pay taxes.Leyla will not pay any taxes due to her holdings in Fireball.
C)Fireball's income will flow through to Leyla's tax return,and she will pay the taxes on the $500,000 of corporate income.
D)Fireball will not pay any taxes,but Leyla will pay taxes on the distribution received.

Question

Quizplus · Accepted Answer

Fireball's income will flow through to Leyla's tax return, and she will pay the taxes on the $500,000 of corporate income.

Fireball Corporation Is an S Corporation