Question

In: Accounting

fireball corporation is an s corporation, Leya owns all of the stock. During the current year....

fireball corporation is an s corporation, Leya owns all of the stock. During the current year. fireball earned a taxable income of 500000 and paid a 300000 distribution to Leyla. which of the following statement is correct

a) fireball will pay corporate income tax in its earnings, and leyla will pay individual income tax on the distribution.

b) only fireball will pay taxes, but leyla will not pay and taxes due to her holding in fireball

C) fireball will not pay any taxes, leyla will pay taxes on the distribution received

d) fireball's income will flow through to leyla's tax return, and she will pay the taxes on the 500000 of corporation income

Solutions

Expert Solution

The correct answer to the above question is option (D), i.e. fireball's income will flow through to leyla's tax return and she will pay the taxes on the 500000 of corporation income because fireball corporation is an S corporation and Leyla owns all of the stock of the corporation.

So, it is only Leyla who have to pay the taxes on 500000 of corporation income.

ekkarill92 answered 2 years ago
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