Juanita Owns 60% of the Stock in a C Corporation

question 3

Multiple Choice

Juanita owns 60% of the stock in a C corporation that had a profit of $200,000 in 2012. Carlos owns a 60% interest in a partnership that had a profit of $200,000 during the year. The corporation distributed $45,000 to Juanita, and the partnership distributed $45,000 to Carlos. Which of the following statements relating to 2012 is incorrect?

• A)Juanita must report $120,000 of income from the corporation.
• B)The corporation must pay corporate tax on $200,000 of income.
• C)Carlos must report $120,000 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:

Race-based Distinctions

The practice or policy of differentiating individuals based on racial characteristics, often leading to discrimination or inequality.

Afro-American League

An early civil rights organization in the United States, aimed at advocating for African American rights and challenging racial discrimination.

T.Thomas Fortune

An African American journalist, editor, and writer, recognized as a leading advocate of civil rights and economic empowerment for African Americans in the late 19th and early 20th centuries.

Freeman

Historically, an individual who was not a serf or slave and possessed certain rights; in the context of American history, often refers to a former slave who has been emancipated.