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C Corporation has an S corporation election in effect. During the 2017 calendar tax year, the...

C Corporation has an S corporation election in effect. During the 2017 calendar tax year, the corporation had ordinary taxable income of $200,000, and on January 15, 2017, the corporation paid dividends to shareholders in the amount of $120,000.

How much taxable income, in total, must the shareholders of the corporation report on their 2017 tax returns?

$120,000 dividend income is taxable income. Should total include $200k ordinary income?

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Expert Solution

For an s corporation its taxable income passes to its shareholder.

Thus, shareholders report $200,000 taxable income on their 2017 tax returns.

Distribution of $120,000 reduces shareholders stock basis in s corporation shares.

ekkarill92 answered 2 years ago
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