Z owns five of an S corporation's 100 shares of common stock outstanding.After holding the stock 73 days during the taxable year, Z sells all five shares.S corporate records for the year show taxable income to be $200,000.If no special election is made, Z's includible share of taxable income from the S corporation is

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Z's includible share of taxable income is $2,000, which is calculated as follows:Includible share of taxable income = (Number of days stock is held / Number of days in taxable year) x Taxable income of S corporation= (73 days / 365 days) x $200,000= $2,000

Z Owns Five of an S Corporation's 100 Shares of Common