XYZ Corporation generated for 20X1 $1,000,000 gross income and $250,000 net taxable income. At the end of said taxable year, the Corporation distributed $40,000 in dividends to each of its two (2) shareholders. What is the tax liability for the Corporation and for the two (2) shareholders? Select one:

a.The Corporation will file a Corporate Income Tax Return and will pay taxes for $250,000 and the shareholders will include the $40,000 of dividends as gross income in their respective Individual Income Tax Returns.

b.The Corporation will file a Corporate Income Tax Return and will pay taxes for $1,000,000 and the shareholders will include the $40,000 as dividend income in their respective Individual Income Tax Returns.

c.The Corporation will file a Corporate Income Tax Return and will pay taxes for $1,000,000 and the shareholders will not have to include the $40,000 as income in their respective Individual Income Tax Returns since the Corporation has already paid the tax on such income.

d.The Corporation will file a Corporate Income Tax Return and will pay taxes for $250,000 and the shareholders will not have to include the $40,000 as income in their respective Individual Income Tax Returns since the Corporation has already paid the tax on such income.