A business generates profit of $100,000.The owner has a 39.6% 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 tax. Instead, profits are passed through to the owners, who pay individual income tax. The owner will pay $39,600 in individual tax (39.6% of $100,000).

A Business Generates Profit of $100,000