Lucinda Is a 60% Shareholder in Rhea Corporation, a Calendar

question 82

Multiple Choice

Lucinda is a 60% shareholder in Rhea Corporation, a calendar year S corporation.During the year, Rhea Corporation had gross income of $550,000 and operating expenses of $380,000.In addition, the corporation sold land that had been held for investment purposes for a short-term capital gain of $30,000.During the year, Rhea Corporation distributed $50,000 to Lucinda.With respect to this information, which of the following statements is correct?

• A)Rhea Corporation will pay tax on taxable income of $200,000.
• B)Lucinda reports ordinary income of $50,000.
• C)Lucinda reports ordinary income of $120,000.
• D)Lucinda reports ordinary income of $102,000 and a short-term capital gain of $18,000.
• E)None of the above.

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Definitions:

Human Resource Management

The strategic approach to the effective management of people in an organization, focusing on policies and systems to improve employee performance and satisfaction.

Management Turnover

The rate at which an organization's management staff leaves and is replaced over a specific period.

Perceptual Errors

Mistakes in judgment that arise from incorrect interpretation of sensory information.

African-Americans

A cultural and ethnic group in the United States consisting of individuals with origins in the black racial groups of Africa.