Leonor is the financial vice-president and owns 60% of Ruston Co. Ruston is an S corporation and reports taxable income of $200,000, before Leonor's salary. Leonor receives a $50,000 salary. What is Leonor's income from Ruston?

Question

Quizplus · Accepted Answer

As an S corporation, Ruston's income is passed through to the shareholders. Leonor owns 60% of Ruston, so her share of the taxable income is 60% * $200,000 = $120,000. 
Her salary of $50,000 is separate from her share of the income, so her total income from Ruston is $120,000 + $50,000 = $170,000. Therefore, the correct answer is (C).

Leonor Is the Financial Vice-President and Owns 60% of Ruston