Bjorn Owns a 60% Interest in an S Corporation That

question 112

Multiple Choice

Bjorn owns a 60% interest in an S corporation that earned $150,000 in 2011. He also owns 60% of the stock in a C corporation that earned $150,000 during the year. The S corporation distributed $30,000 to Bjorn and the C corporation paid dividends of $30,000 to Bjorn. How much income must Bjorn report from these businesses?

• A) $0 income from the S corporation and $30,000 income from the C corporation.
• B) $90,000 income from the S corporation and $30,000 income from the C corporation.
• C) $90,000 income from the S corporation and $0 income from the C corporation.
• D) $30,000 income from the S corporation and $30,000 of dividend income from the C corporation.
• E) None of the above.

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Definitions:

Profit Sharing

A compensation strategy where employees receive a share of the company's profits in addition to their regular salary.

Gainsharing Program

A compensation strategy that shares the financial benefits of performance improvements with employees through collective incentives.

Incentive Pay

Additional compensation awarded to employees for achieving specified goals or exemplary performance.

Performance Measures

Quantitative and qualitative indicators used to assess how well an individual, organization, or system is performing, often against predefined targets or standards.