For its year ended December 31, 2019, Cupressa Corporation, an S corporation, had net income of $216,000 which included $180,000 of ordinary income from operations and a $36,000 net long-term capital gain. During 2019, a total of $90,000 was distributed to the corporation's nine equal shareholders, all of whom are on a calendar-year tax basis. For 2019, each shareholder should report:

Question

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Each shareholder should report their pro rata share of the income and capital gain. The pro rata share of ordinary income would be $20,000 (180,000/9) and the pro rata share of the net long-term capital gain would be $4,000 (36,000/9). Therefore, each shareholder should report $20,000 of ordinary income and $4,000 of net long-term capital gain.

For Its Year Ended December 31, 2019, Cupressa Corporation, an S