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

question 28

Multiple Choice

Lucinda is a 60% shareholder in Rhea Corporation,a calendar year S corporation.During the current 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:

Reflex Hammer

A medical tool used by practitioners to test deep tendon reflexes, aiding in the diagnosis of neurological conditions that affect reflexes.

Tendon

is a strong, flexible band of fibrous tissue that connects muscles to bones, allowing force to be transmitted and producing movement.

Reflex Arc

The neural pathway that mediates a reflex action, involving sensory receptors, nerves, and the spinal cord.

Integration Center

An area of the central nervous system, such as the brain or spinal cord, where information is processed and interpreted.