When an employee/shareholder receives an income allocation from an S corporation, what taxes apply to the income allocation?
A) FICA tax only.
B) Self-employment tax only.
C) FICA and self-employment tax.
D)None of these. This income will never be taxed.
E)None of these

Question

Quizplus · Accepted Answer

Income allocations from an S corporation to a shareholder are typically not subject to FICA or self-employment taxes. Instead, they are taxed as ordinary income on the shareholder's personal tax return.

When an Employee/shareholder Receives an Income Allocation from an S