Lemon Corporation Incurs the Following Transactions Lemon Maintains a Valid S Election and Does Not Distribute

question 69

Multiple Choice

Lemon Corporation incurs the following transactions. $\begin{array}{lc}\text { Net income from operations } & \$ 110,000 \\\text { Interest income from saving account } & 5,000 \\\text { Long-term capital gain from sale of securities } & 9,000 \\\text { Short-term capital loss from sale of securities } & 4,000\end{array}$ Lemon maintains a valid S election and does not distribute any dividends to its shareholder, Patty. As a result, which of the following must Patty recognize? Ignore the 20% QBI deduction.

• A) Ordinary income of $115,000 and long-term capital gain of $5,000.
• B) Ordinary income of $115,000, long-term capital gain of $9,000, and $4,000 short-term capital loss.
• C) Ordinary income of $120,000.
• D) Capital gain of $120,000.

---

Definitions:

Diplomacy

The professional, skilled conduct of negotiations and managing relationships between governments of different countries by diplomats and political leaders.

Peaceful Methods

Techniques or approaches used to resolve conflicts or achieve goals without violence.

International Relations

The study and practice of political, economic, and cultural relationships between nations.

Iranian Relations

The diplomatic, economic, and military interactions between the governments of Iran and other countries.