Juanita Owns 45% of the Stock in a C Corporation

question 31

Multiple Choice

Juanita owns 45% of the stock in a C corporation that had a profit of $120,000 in 2011. Carlos owns a 45% interest in a partnership that had a profit of $120,000 during the year. The corporation distributed $20,000 to Juanita, and the partnership distributed $20,000 to Carlos. Which of the following statements relating to 2011 is incorrect?

• A) Juanita must report $20,000 of income from the corporation.
• B) The corporation must pay corporate tax on $120,000 of income.
• C) Carlos must report $20,000 of income from the partnership.
• D) The partnership is not subject to a Federal entity-level income tax.
• E) None of the above.

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Definitions:

Few Retail Outlets

A market structure where there are a limited number of places for consumers to make purchases in a given area.

Marketing Channel

Pathways and processes by which products or services flow from the producer or supplier to the consumer, including logistics, distribution, and retailing activities.

Limited Knowledge

The state of having incomplete or inadequate information about a subject or situation.

Specific Data

Information that is explicitly detailed and tailored to a particular need or requirement.