Alvin is the sole shareholder of an S corporation that earned $200,000 in 2018 and distributed $75,000 to Alvin. Alvin must recognize $75,000 as income from the S corporation in 2018.

Question

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Alvin must recognize the entire $200,000 as income from the S corporation in 2018, not just the $75,000 distributed to him. S corporation income is passed through to shareholders regardless of distributions.

Alvin Is the Sole Shareholder of an S Corporation That