For its year ended December 31, 2018, Cupressa Corporation, an S corporation, had net income of $216,000 which included $180,000 of ordinary income from operations and a $36,000 net long-term capital gain. During 2018, a total of $90,000 was distributed to the corporation's nine equal shareholders, all of whom are on a calendar-year tax basis. For 2018, each shareholder should report:

a.$24,000 ordinary income

b.$20,000 ordinary income and $4,000 net long-term capital gain

c.$20,000 ordinary income

d.$10,000 ordinary income

e. None of these choices are correct.

Question

Antony Ponce

Business

2 April, 03:27

For its year ended December 31, 2018, Cupressa Corporation, an S corporation, had net income of $216,000 which included $180,000 of ordinary income from operations and a $36,000 net long-term capital gain. During 2018, a total of $90,000 was distributed to the corporation's nine equal shareholders, all of whom are on a calendar-year tax basis. For 2018, each shareholder should report:

a.$24,000 ordinary income

b.$20,000 ordinary income and $4,000 net long-term capital gain

c.$20,000 ordinary income

d.$10,000 ordinary income

e. None of these choices are correct.

+3

Answers (1)

Know the Answer?

Alexzander Melendez · Answer 1

b.$20,000 ordinary income and $4,000 net long-term capital gain.

Explanation:

For 2018, each shareholder should report:

180,000/9 = 20,000

36,000/9 = 4,000

b.$20,000 ordinary income and $4,000 net long-term capital gain