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:

Check Register

A record keeping tool used to track checks written, deposits made, and current balance for a checking account.

Check Number

A unique identification number assigned to each transaction in a checkbook or bank account for tracking and record-keeping purposes.

Balance

The ability to maintain the body's center of mass over its base of support, crucial for daily activities and preventing falls.

Third-Party Check

A check made payable to one party and then endorsed to another as a payment method.