Rover Corporation Is a Regular Corporation That Has Not Elected

question 93

Multiple Choice

Rover Corporation is a regular corporation that has not elected S corporation status.In 1992,Rover earns $100,000; in 1993,Rover distributes $50,000 to its shareholders.Which of the following best describes the tax consequences to Rover and its shareholders?

• A) The shareholders are taxed on $100,000 in 1992; Rover is not subject to tax.
• B) Rover is taxed on $100,000 in 1992; the shareholders are not subject to tax.
• C) Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1992.
• D) Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1993.
• E) Neither Rover nor its shareholders are subject to tax.

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