A business generates profit of $100,000. The owner has a 35% marginal tax rate. What amount of corporate and individual income tax will be paid on this profit if the business is an S corporation and no income is distributed?

Question

Quizplus · Accepted Answer

An S corporation does not pay corporate income tax. Instead, profits are passed through to the owners, who pay individual income tax. The owner will pay $35,000 (35% of $100,000) in individual tax.

A Business Generates Profit of $100,000