n Supernatural, Inc., an electing S corporation, holds $5,000 of AEP and $9,000 in AAA at the beginning of the calendar tax year. Supernatural has two shareholders, John and Mary, each of whom owns 500 shares of Supernatural's stock (they share ownership 50/50). Supernatural's taxable income is $6,000 for the year. Supernatural distributes $9,000 to each shareholder during the year. How is John taxed on the distribution? Select one: O A. $3,000 dividend income. O B. $500 dividend income. O C. $1,000 dividend income. OD. $1,500 dividend income.
n Supernatural, Inc., an electing S corporation, holds $5,000 of AEP and $9,000 in AAA at the beginning of the calendar tax year. Supernatural has two shareholders, John and Mary, each of whom owns 500 shares of Supernatural's stock (they share ownership 50/50). Supernatural's taxable income is $6,000 for the year. Supernatural distributes $9,000 to each shareholder during the year. How is John taxed on the distribution? Select one: O A. $3,000 dividend income. O B. $500 dividend income. O C. $1,000 dividend income. OD. $1,500 dividend income.
Chapter20: Corporations And Parterships
Section: Chapter Questions
Problem 49P
Related questions
Question
Transcribed Image Text:n
Supernatural, Inc., an electing S corporation, holds $5,000 of AEP and $9,000 in AAA at the beginning of the
calendar tax year. Supernatural has two shareholders, John and Mary, each of whom owns 500 shares of
Supernatural's stock (they share ownership 50/50). Supernatural's taxable income is $6,000 for the year.
Supernatural distributes $9,000 to each shareholder during the year. How is John taxed on the distribution?
Select one:
O A. $3,000 dividend income.
O B. $500 dividend income.
O C. $1,000 dividend income.
OD. $1,500 dividend income.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you