Question

With regards to a shareholder in an “S” corporation, which of the following statements is FALSE?

a. If he/she works for the “S” corporation, that shareholder can just take cash distributions from the corporation and does not have to be paid a salary

b. If he/she works for the “S” corporation, that shareholder will not be subject to the at-risk rules with respect to the shareholder’s individual tax return if the “S” never experiences a loss.

c. If he/she works for the “S” corporation, that shareholder might be subject to the passive loss rules with respect to the shareholder’s individual tax return if the “S” corporation experiences a loss.

d. All of the above statements are true

Answer 1

A. false, if he/she is working for S corporation, he has right to have salary.

B. True,If  he/she works for the “S” corporation, that shareholder will not be subject to the at-risk rules with respect to the shareholder’s individual tax return if the “S” never experiences a loss.

C False, If he/she works for the “S” corporation, that shareholder might be subject to the passive loss rules with respect to the shareholder’s individual tax return if the “S” corporation experiences a loss.

D, False, all sentence are not true.