CPA Study Group

Team up with fellow candidates and conquer your exams.
Get your FREE CPA Questions Now
Back to Study Group
C
S-Corp Distributions
Chris-15937 - 11/15/2018, 5:20 am

So we’re just going to ignore the $24,000 that Serena gets in cash distribution from the S-Corp? Is it because of the wording of the 4 choices?

REG
Reply
Comment
Report
2
A
Akimou-78245 - 11/19/2018, 1:17 am

actually we not ignoring the $24,000 it is part of the answer. we know that S-corporation are pass through entity so Serena is actually recognizing income of $60,000 and since she received a dividend of $24,000 which represent 30% then she will recognize $36,000 extra, both are taxable. as for Jan she will only recognize $24,000 since her income comes from a C corporation. As we know C corp. are not pass through entities.

Comment
Report
Chris-15937 - 01/15/2019, 12:50 am

I understand that Jan is only reporting $24k taxable.

I was under the impression that Serena will report $60k as taxable flow-through operating income in addition to $24k taxable cash distribution for a total of $84k taxable income. Is this not supposed to be the case?