What amount would Becca declare on her income tax return if Becca and Suzanne had formed a Subchapter S corporation and there wa

Question

3 years ago

7

What amount would Becca declare on her income tax return if Becca and Suzanne had formed a Subchapter S corporation and there wa

s no provision in their agreement on how profits are to be split? a. the full $275,000 b. $137,500 c. the Subchapter S corporation must retain at least half of the $275,000 and Becca reports half of $137,500 d. nothing, because the Subchapter S corporation reports that income and pays the taxes

Business

1 answer:

trapecia [35] · Answer 1 · 2022-03-05T10:19:39+03:00

Answer: B. 137,500

Explanation: since there was no provision in their agreement on how profits are to be split,

The full profit after expenses will be split/shared equally for peace sake.

ie $275,000÷2 = $137,500

Also, following Subchapter S corporation; it requires that all the owners be treated the same way in terms of their shares of the firm’s operating profits, liquidation profits, and distributions of those profits.