Owen and Jessica own and operate an S corporation. Each is a 50% owner. The business reports the following results: How do Owen and Jessica report these items for tax purposes?

Question

Owen and Jessica own and operate an S corporation. Each is a 50% owner. The business reports the following results:  How do Owen and Jessica report these items for tax purposes?

Quizplus · Accepted Answer

As S corporation income passes through to the individual owners, Owen and Jessica will report their share of the income and expenses on their personal tax returns. The business reports $137,000 of income, which means each owner reports $68,500 on Schedule E. The investment expense of $16,000 can be deducted on Schedule A as a miscellaneous itemized deduction subject to limitations. Since Owen and Jessica are each 50% owners, they will split the investment expense and report $8,000 each.

Owen and Jessica Own and Operate an S Corporation