Claudia owns 10% of the stock of Fitness Design Corporation, an S corporation. She is also its controller. Fitness Design reports taxable income of $70,000 and pays $60,000 in dividends to shareholders before considering Claudia's salary. Claudia receives a $75,000 salary. What is Claudia's income from Fitness Design?

Question

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Claudia's income from Fitness Design is $74,500. This is calculated as follows:Taxable income: $70,000Dividends: $60,000Claudia's salary: $75,000Claudia's share of taxable income: 10% x $70,000 = $7,000Claudia's income from Fitness Design: $7,000 + $60,000 + $75,000 = $74,500

Claudia Owns 10% of the Stock of Fitness Design Corporation