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:

Master Trait

A dominant characteristic or quality that significantly shapes an individual's behavior and identity.

Unconscious Forces

Psychological forces not present in conscious awareness but influencing emotions, behavior, and thoughts.

Superego

In psychoanalytic theory, the part of the personality that acts as the moral center, enforcing ethical conduct and societal norms.

Motives

The reasons behind an individual's actions, desires, and needs which drive their behavior.