Question
The KLM Corp. is a subchapter S corporation. Ken, who is the K in KLM owns 40% of the outstanding common stock of the corporation.
The KLM Corp. is a subchapter S corporation. Ken, who is the K in KLM owns 40% of the outstanding common stock of the corporation. During 2019, the KLM reported $300,000 of income that is subject to income taxes on some basis. Also during 2019, the corporation declared and paid total cash dividends of $225,000.
Required:
(a) How much taxable income will this subchapter S corporation report and pay taxes on?
(b) How much taxable income from this corporate investment will Ken include on his 2019 individual tax return?
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Auditing The Art and Science of Assurance Engagements
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Ingrid B. Splettstoesser
12th Canadian edition
133098230, 978-0132791564, 132791560, 978-0133098235
