The shareholders of an S corporation must pay self-employment tax on their share of the corporation's ordinary income.

Name: The shareholders of an S corporation must pay self-employment tax on their share of the corporation's ordinary income.
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Shareholders of an S corporation do not pay self-employment tax on their share of the corporation's ordinary income; instead, they pay income tax on their share of the corporation's profits, but the profits are not subject to self-employment taxes.

The Shareholders of an S Corporation Must Pay Self-Employment Tax