Jake is the sole shareholder of an S corporation that earned $60,000 in 2015.The corporation was short on cash and therefore distributed only $15,000 to Jake in 2015.Jake is required to recognize $60,000 of income from the S corporation in 2015.

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As the sole shareholder of an S corporation, Jake is required to recognize all the income earned by the corporation, regardless of whether or not it was distributed to him. In this case, the S corporation earned $60,000 in 2015, so Jake must recognize that amount as income on his personal tax return for the year. The fact that the corporation only distributed $15,000 to Jake does not change his tax liability.

Jake Is the Sole Shareholder of an S Corporation That