Lucinda Is a 60% Shareholder in Rhea Corporation, a Calendar

question 82

Multiple Choice

Lucinda is a 60% shareholder in Rhea Corporation, a calendar year S corporation.During the year, Rhea Corporation had gross income of $550,000 and operating expenses of $380,000.In addition, the corporation sold land that had been held for investment purposes for a short-term capital gain of $30,000.During the year, Rhea Corporation distributed $50,000 to Lucinda.With respect to this information, which of the following statements is correct?

• A)Rhea Corporation will pay tax on taxable income of $200,000.
• B)Lucinda reports ordinary income of $50,000.
• C)Lucinda reports ordinary income of $120,000.
• D)Lucinda reports ordinary income of $102,000 and a short-term capital gain of $18,000.
• E)None of the above.

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Definitions:

Constructive Eviction

A situation where a landlord's actions or a property's condition effectively force a tenant to move out, thereby breaching the lease agreement.

Furnishes Heat

Providing warmth or heat to a space or environment, typically as a utility service.

Unreasonable Abandonment

In legal terms, refers to the act of leaving or surrendering a property or right without just cause or in a manner deemed excessive or unjustified.

Periodic Tenancy

A rental agreement that continues for successive periods (such as month-to-month or year-to-year) until either the landlord or tenant terminates it.