June is a 20% owner-employee in the Woodbourne Corporation, an S corporation. She is not paid a salary and her share of the corporation's income is $57,000.
I.June must pay self-employment tax at the rate of 15.3% on her share of the S corporation's income.
II.June must pay Social Security at a rate of 7.65% on her share of the S corporation income.

Question

June is a 20% owner-employee in the Woodbourne Corporation, an S corporation. She is not paid a salary and her share of the corporation's income is $57,000.
I.June must pay self-employment tax at the rate of 15.3% on her share of the S corporation's income.
II.June must pay Social Security at a rate of 7.65% on her share of the S corporation income.
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Quizplus · Accepted Answer

Shareholders of an S corporation report their share of income on their personal tax returns, but this income is not subject to self-employment tax. S corporation distributions are generally considered passive income, not earned income, and thus are not subject to self-employment or Social Security taxes.

June Is a 20% Owner-Employee in the Woodbourne Corporation, an S