Question

Wilma is one of five equal members of Polar, LLC. This year, Polar generates $5 million in profits. The company reinvests $4 million into the company, leaving $1 million to be divided equally among the members. How are federal income taxes paid o

Answer 1

Answer:

c. Wilma (and each of the members) pays taxes on their $1 million share ($5 million divided by 5) of profits.

Explanation:

Data provided in the questions

Generated profits = $5 million

Reinvested amount into the company = $4 million

Out of which $1 million is to be divided equally

based on the above information, the federal income tax should be paid by 5 members of $1 million each

Hence, the option c is correct  

And all other options are wrong