Stockholders of an S corporation pay taxes on their share of the corporate net income whether they receive it or not.

Question

Quizplus · Accepted Answer

This is true. S corporations are pass-through entities, meaning that the profits and losses of the corporation flow through to the individual shareholders, who then report their share of the income or loss on their personal tax returns. This happens regardless of whether the profits are actually distributed to the shareholders.

Stockholders of an S Corporation Pay Taxes on Their Share