Owen and Jessica Own and Operate an S Corporation $\begin{array}{lll}\text {Business revenue }&\$225,000\\\text {Business expenses }&88,000\\\text {Investment expenses }&16,000\\\end{array}$

question 88

Multiple Choice

Owen and Jessica own and operate an S corporation.Each is a 50% owner.The business reports the following results: $\begin{array}{lll}\text {Business revenue }&\$225,000\\\text {Business expenses }&88,000\\\text {Investment expenses }&16,000\\\end{array}$
How do Owen and Jessica report these items for tax purposes?

• A)$68,500 income on Schedule E;$16,000 investment expense on Schedule D
• B)$68,500 income on Schedule E;$8,000 investment expense on Schedule A
• C)$137,000 income on Schedule E;$88,000 investment expense on Schedule A
• D)$225,000 income on Schedule E;$16,000 investment expense on Schedule A

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Definitions:

Agency Law

The area of law dealing with the actions of agents, who are authorized to act on behalf of others (principals) in legal or business transactions.

Partnerships

A business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed.

Relationships Among Partners

The legal and interpersonal dynamics that govern the interactions, responsibilities, and obligations between partners in a business partnership.

Articles of Partnership

A document outlining the terms and conditions of a partnership between two or more parties.