The Vanity Corporation Organized and Began Operations in January

question 68

Essay

The Vanity Corporation organized and began operations in January. The corporation's ten equal shareholders elect to have Vanity taxed as an S corporation, and the election and necessary consents are filed in a timely manner. For its first tax year ended December 31, Vanity has ordinary income of $64,000 and short-term capital gains of $16,000. During the year, it distributes $30,000 in cash equally to its ten shareholders. For the year, how much income should each shareholder report and how should it be characterized?

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Definitions:

Content Theories

Theories that explain the specific factors motivating individuals at work, focusing on the content of what motivates individuals.

Abraham Maslow

An American psychologist best known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs.

Clayton Alderfer

An American psychologist known for developing the ERG theory, which categorizes human needs into existence, relatedness, and growth categories.

David McClelland

A psychologist known for developing the theory of needs, which includes the needs for achievement, power, and affiliation, influencing the understanding of motivation.