When an employee/shareholder receives a business income allocation from an S corporation, what taxes apply to the business income allocation?

Question

Quizplus · Accepted Answer

S corporation business income allocations to an employee/shareholder are subject to regular income tax but are not subject to FICA or self-employment taxes. This is because S corporation distributions are considered pass-through income and are taxed at the shareholder level, not as self-employment income.

When an Employee/shareholder Receives a Business Income Allocation from an S