Juanita Owns 60% of the Stock in a C Corporation

question 45

Multiple Choice

Juanita owns 60% of the stock in a C corporation that had a profit of $200,000 in 2014.Carlos owns a 60% interest in a partnership that had a profit of $200,000 during the year.The corporation distributed $45,000 to Juanita,and the partnership distributed $45,000 to Carlos.Which of the following statements relating to 2014 is incorrect?

• A)Juanita must report $120,000 of income from the corporation.
• B)The corporation must pay corporate tax on $200,000 of income.
• C)Carlos must report $120,000 of income from the partnership.
• D)The partnership is not subject to a Federal entity-level income tax.
• E)None of the above.

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market balance.

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Portable digital devices designed to play music files in the MP3 format, allowing users to listen to music on the go.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where the quantity demanded equals the quantity supplied.

Inverse Demand Curve

A graphical representation that shows the relationship between the price of a good and the quantity demanded, illustrating how the demand for a product changes as its price increases or decreases.