Cactus Corporation,an S Corporation,had accumulated earnings and profits of $100,000 at the beginning of 2011.Tex and Shirley each own 50% of the stock.Cactus does not make any distributions during 2011,but had $200,000 of ordinary income.In 2012,ordinary income was $100,000 and distributions were $100,000.What is Tex's ordinary income for 2012?

Question

Quizplus · Accepted Answer

Tex's ordinary income for 2012 is $50,000 because he owns 50% of the stock, and the S Corporation's ordinary income of $100,000 is passed through to the shareholders based on their ownership percentage.

Cactus Corporation,an S Corporation,had Accumulated Earnings and Profits of $100,000