Juanita owns 60% of the stock in a C corporation that had a profit of $200,000 in the current year.Carlos owns a 60% interest in a partnership that had a profit of $200,000 during the year.The corporation distributed $45,000 to Juanita,and the partnership distributed $45,000 to Carlos.With respect to this information,which of the following statements is incorrect?
A)Juanita must report $120,000 of income from the corporation.
B)The corporation must pay corporate tax on $200,000 of income.
C)Carlos must report $120,000 of income from the partnership.
D)The partnership is not subject to a Federal entity-level income tax.
E)None of the above.

Question

Quizplus · Accepted Answer

Juanita does not report $120,000 of income from the corporation. Instead, she reports the $45,000 she received as a dividend. The corporation itself pays taxes on the $200,000 profit.

Juanita Owns 60% of the Stock in a C Corporation