S corporation shareholders are subject to self-employment tax on business income allocations from the S corporation if they are actively involved in the S corporation's business.

A) TRUE

B) FALSE

Question

Deshawn Shelton

Business

29 May, 20:21

S corporation shareholders are subject to self-employment tax on business income allocations from the S corporation if they are actively involved in the S corporation's business.

A) TRUE

B) FALSE

+5

Answers (1)

Know the Answer?

Janiya Robertson · Answer 1

The statement is false

Explanation:

S corporations are pass through corporations, which means income earned is passed to the owners and they are taxed at individual level.

Shareholders of S corporation earns income in the form of wages and distributions. Wages are charged with payroll taxes. S corporation shareholders are not subject to self-employment taxes which is an advantage for them.

Therefore, the statement is false

S corporation shareholders are subject to self-employment tax on business income allocations from the S corporation if they are actively involved in the S corporation's business.A) TRUEB) FALSE

S corporation shareholders are subject to self-employment tax on business income allocations from the S corporation if they are actively involved in the S corporation's business.

A) TRUE

B) FALSE