Ted Owns 20% of Genco (A C Corporation)that Had Taxable

question 28

Multiple Choice

Ted owns 20% of Genco (a C corporation) that had taxable income of $100,000 and paid a total of $50,000 in dividends to its shareholders.Ted also owns a 10% of Subco (an S corporation) that had $100,000 of taxable income and distributed a total of $60,000 to its shareholders.How much must Ted include in his gross income as a result of being a shareholder in these two corporations?

• A)$16,000
• B)$20,000
• C)$26,000
• D)$30,000

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Definitions:

Prepaid Rent Expense

An accounting term for rent payments made in advance of the rental period, recorded as an asset on the balance sheet until the period of use.

Adjustment

The process of making entries to correct accounts or to allocate amounts properly at the end of an accounting period.

Office Equipment

Assets like computers, desks, chairs, and printers that are used in an office setting for the operation of the business.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life.