Fireball Corporation Is an S Corporation

question 47

Multiple Choice

Fireball Corporation is an S corporation.Leyla owns all of the stock.During the current year Fireball earned taxable income of $500,000 and paid a $300,000 distribution to Leyla.Which of the following statements is correct?

• A)Fireball will pay corporate income tax on its earnings,and Leyla will paid individual income tax on the distribution.
• B)Only Fireball will pay taxes.Leyla will not pay any taxes due to her holdings in Fireball.
• C)Fireball's income will flow through to Leyla's tax return,and she will pay the taxes on the $500,000 of corporate income.
• D)Fireball will not pay any taxes,but Leyla will pay taxes on the distribution received.

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5P Checklist

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