Rajib is the sole shareholder of Robin Corporation, a calendar year S corporation.Robin earned net profit of $350,000 ($520,000 gross income - $170,000 operating expenses) and distributed $80,000 to Rajib.Rajib must report Robin Corporation profit of $350,000 on his Federal income tax return.

Question

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As the sole shareholder of Robin Corporation, Rajib must report the net profit of $350,000 on his personal income tax return, even if the corporation distributed only a portion of the profits to him. This is because S corporations are pass-through entities, meaning that their profits and losses flow through to the shareholders' individual tax returns.

Rajib Is the Sole Shareholder of Robin Corporation, a Calendar