True or False ?

Elaina and and Liliana are equal shareholders in E&L Enterprises, a C corporation. During the year, E&L Enterprises had $550,000 of gross income and $200,000 of operating expenses, for a total of $350,000 of net income. E&L Enterprises distributes $250,000 to Elaina and Liliana ($125,000 to each of them) and does not distribute the remaining $100,000. E&L Enterprises pays corporate-level tax on its $350,000 of net income. Elaina and Liliana must each pay tax on the $125,000 that is actually distributed to each of them and on the $50,000 of phantom income that is not distributed to each of them.