When an employee/shareholder receives an income allocation from an S corporation, what taxes apply to the income allocation?
A) FICA and self-employment tax.
B) Self-employment tax only.
C) FICA tax only.
D) None of the choices are correct. This income will never be taxed.
E) None of the choices are correct. This income will, however, be subject to regular income tax.

Question

Quizplus · Accepted Answer

Income allocations from an S corporation to a shareholder are subject to regular income tax but not to FICA or self-employment taxes.

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