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19 September, 02:47

Juanita owns 60% of the stock in a C corporation that had a profit of $200,000 in the current year. Carlos owns a 60% interest in a partnership that had a profit of $200,000 during the year. The corporation distributed $45,000 to Juanita, and the partnership distributed $45,000 to Carlos. With respect to this information, which of the following statements is incorrect?

(a) Juanita must report $120,000 of income from the corporation.

(b) The corporation must pay corporate tax on $200,000 of income.

(c) Carlos must report $120,000 of income from the partnership.

(d) The partnership is not subject to a Federal entity-level income tax.

(e) None of the above.

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Answers (1)
  1. 19 September, 05:00
    0
    The statement which is incorrect or not true is Option A.

    Explanation:

    Juanita owns 60% of stock in the corporation, so from the profit of $200,000 in the current year, she should report

    = $200,000 * 60%

    = $120,000

    But the Corporation distributed $45,000 to Juanita. Therefore, she should report only $45,000 for this year not $120,000.

    Therefore, the first option is incorrect.
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