Rajib is the sole shareholder of Robin Corporation, a calendar year S corporation. In the current year, Robin earned net profit of $350,000 ($520,000 gross income - $170,000 operating expenses) and distributed $80,000 to Rajib. Rajib must report Robin Corporation profit of $350,000 on his Federal income tax return.

Question

Quizplus · Accepted Answer

As the sole shareholder of an S corporation, Rajib reports the corporation's income on his personal income tax return, including both the distributed income ($80,000) and the undistributed income ($270,000) as reported by the corporation ($350,000). Therefore, Rajib must report Robin Corporation profit of $350,000 on his Federal income tax return.

Rajib Is the Sole Shareholder of Robin Corporation, a Calendar