Carlotta is the director of golf for Birck Enterprises, an electing S corporation. Carlotta owns a 20% interest in Birck. She receives a salary of $60,000 and fringe benefits costing $6,000. Birck's taxable income before considering the payments to and on behalf of Carlotta is $250,000. Birck's distributes a $50,000 dividend to its shareholders. How much income does Carlotta have from Birck?

Question

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Carlotta's total income from Birck includes her salary, the value of her fringe benefits, and her share of the S corporation's income and dividends. Her salary is $60,000, and the fringe benefits are valued at $6,000. The S corporation's income is $250,000, and Carlotta owns a 20% interest, so her share of the income is 20% of $250,000, which equals $50,000. S corporations distribute their income to shareholders, and it is taxed on the shareholders' personal income tax returns, not at the corporate level. Therefore, the $50,000 dividend distribution is not additional income to Carlotta; it's part of her share of the S corporation's income. Thus, her total income from Birck is her salary ($60,000) + fringe benefits ($6,000) + her share of the S corporation's income ($50,000), totaling $116,000. However, since none of the provided options match this calculation and considering the context of the question, it seems there might have been a misunderstanding in the calculation process regarding how S corporation distributions are treated. Given the options and the typical understanding of S corporation income distribution, the closest correct answer based on the provided information would be to consider her direct compensation and her share of the income, which was not directly provided as an option. Therefore, the correct response based on the standard treatment of S corporation income and the provided options would be to reevaluate the calculation or the understanding of the question's premise.

Carlotta Is the Director of Golf for Birck Enterprises, an Electing