Luis Is the Sole Shareholder of a Regular C Corporation

question 5

Multiple Choice

Luis is the sole shareholder of a regular C corporation, and Eduardo owns a proprietorship. In the current year, both businesses make a profit of $80,000 and each owner withdraws $50,000 from his business. With respect to this information, which of the following statements is incorrect?

• A) Eduardo must report $80,000 of income on his return.
• B) Luis must report $80,000 of income on his return.
• C) Eduardo's proprietorship is not required to pay income tax on $80,000.
• D) Luis's corporation must pay income tax on $80,000.
• E) None of these.

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Definitions:

Logic

The study of principles of reasoning, especially of the structure of propositions and the way in which they relate to each other to form valid arguments.

Hypothesis

Testable explanation of a natural phenomenon.

Natural Phenomenon

A naturally occurring event or occurrence that can be observed in the physical world, not caused by humans.

Conclusive Description

Definitive or decisive description that leaves no room for doubt or questions.