Cactus Corporation, an S Corporation, had accumulated earnings and profits of $100,000 at the beginning of 2018. Tex and Shirley each own 50% of the stock. Cactus does not make any distributions during 2018, but had $200,000 of ordinary income. In 2019, ordinary income was $100,000 and distributions were $100,000. What is Tex's ordinary income for 2018?

Question

Quizplus · Accepted Answer

Tex's ordinary income for 2018 is $100,000, which is 50% of the $200,000 ordinary income earned by the S Corporation, as he owns 50% of the stock.

Cactus Corporation, an S Corporation, Had Accumulated Earnings and Profits