Lemon Corporation incurs the following transactions. 
Lemon maintains a valid S election and does not distribute any dividends to its shareholder, Patty.As a result, which of the following must Patty recognize? Ignore the 20% QBI deduction.
A) Ordinary income of $115,000 and long-term capital gain of $5,000.
B) Ordinary income of $115,000, long-term capital gain of $9,000, and $4,000 short-term capital loss.
C) Ordinary income of $120,000.
D) Capital gain of $120,000.
Correct Answer:
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