Owen and Jessica Own and Operate an S Corporation

question 19

Multiple Choice

Owen and Jessica own and operate an S corporation. Each is a 50% owner. The business reports the following results: How do Owen and Jessica report these items for tax purposes?

• A) $68,500 income on Schedule E; $16,000 investment expense on Schedule D
• B) $68,500 income on Schedule E; $8,000 investment expense on Schedule A
• C) $137,000 income on Schedule E; $88,000 investment expense on Schedule A
• D)$225,000 income on Schedule E; $16,000 investment expense on Schedule A

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Definitions:

Statute of Frauds

A legal principle requiring certain types of contracts (e.g., real estate transactions, contracts not to be performed within one year) to be in writing to be enforceable.

Partially Performed

A term referring to a contract or agreement that has been started but not fully executed or completed.

Intended To Be Bound

A principle indicating that parties involved in an agreement wish and intend to be legally obligated under that agreement.

Void

Lacking legal validity or effect; something that is null and cannot produce any legal consequences.