S corporation shareholders are subject to self-employment tax on business income allocations from the S corporation if they are actively involved in the S corporation's business.

A) TRUE

B) FALSE

Question

Business

Jaslyn Jones

17 November, 05:34

S corporation shareholders are subject to self-employment tax on business income allocations from the S corporation if they are actively involved in the S corporation's business.

A) TRUE

B) FALSE

+5

Answers (1)

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Ashlyn Welch · Answer 1

The statement is false

Explanation:

S corporations are pass through corporations, which means income earned is passed to the owners and they are taxed at individual level.

Shareholders of S corporation earns income in the form of wages and distributions. Wages are charged with payroll taxes. S corporation shareholders are not subject to self-employment taxes which is an advantage for them.

Therefore, the statement is false

S corporation shareholders are subject to self-employment tax on business income allocations from the S corporation if they are actively involved in the S corporation's business.A) TRUEB) FALSE

S corporation shareholders are subject to self-employment tax on business income allocations from the S corporation if they are actively involved in the S corporation's business.

A) TRUE

B) FALSE