Tax-exempt income at the corporate level flows through as exempt to S shareholders.

Name: Tax-exempt income at the corporate level flows through as exempt to S shareholders.
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Question

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Tax-exempt income at the corporate level, such as municipal bond interest or certain types of foreign income, flows through as exempt to S corporation shareholders. This income is not subject to federal income tax at the corporate or shareholder level.

Tax-Exempt Income at the Corporate Level Flows Through as Exempt