Bjorn Owns a 60% Interest in an S Corporation That

question 72

Multiple Choice

Bjorn owns a 60% interest in an S corporation that earned $150,000 in 2016. He also owns 60% of the stock in a C corporation that earned $150,000 during the year. The S corporation distributed $30,000 to Bjorn and the C corporation paid dividends of $30,000 to Bjorn. How much income must Bjorn report from these businesses?

• A)$0 income from the S corporation and $30,000 income from the C corporation.
• B)$30,000 income from the S corporation and $30,000 of dividend income from the C corporation.
• C)$90,000 income from the S corporation and $0 income from the C corporation.
• D)$90,000 income from the S corporation and $30,000 income from the C corporation.
• E)None of the above.

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Definitions:

Going Concern

An accounting principle where it's assumed that a company will continue in business for the foreseeable future without the need to cease operations or liquidate assets.

Pledged Assets

Assets that are pledged as security or collateral for a loan or obligation, ensuring the lender has a claim to the asset in case of default.

Accounts Payable

Short-term obligations or debts a company owes to its suppliers or creditors.

Note Payable

A written promise to pay a specific amount of money, often bearing interest, at a future date or on demand.