As a Shareholder of an S Corporation,Dave Is Entitled to a Profit

question 92

Essay

As a shareholder of an S corporation,Dave is entitled to a profit proportionate to his interest in the corporation.How would Dave pay his taxes for the profits from his shares in the S corporation?

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Definitions:

Equity

The value of shares issued by a company, representing ownership interest held by shareholders.

Share Capital

The total amount of funds raised by a company through the issuance of shares to its shareholders.

Retained Earnings

The portion of net income that is retained by the corporation rather than distributed to its shareholders as dividends.

Other Reserves

Equity accounts that record gains and losses recognized directly in equity, including revaluation reserves and reserves created from the reallocation of profits.