Question

S corporation has two equal shareholders: Tim Idd and Sally Forth. S corporation operation net income...

S corporation has two equal shareholders: Tim Idd and Sally Forth. S corporation operation net income was $100,000, LT capital gains $20,000, and Pepsi dividends of $2000; charitable contribution to usi was $2000. What are the tax consequences

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Answer #1

The following are the implications,

  1. The operation net income of s corporation will be taxable in the hands of corporation itself and if it pays any dividend to the shareholders, then such dividend will be taxed in the hands of shareholders.
  2. LT capital gains and also dividends received from pepsi will be taxable with the corporation itself and has nothing to do with shareholders.
  3. The charitable contribution will be eligible for deduction subject to such conditions as may be imposed from time to time.
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