Question
Youthglow Products, Incorporated is a C corporation. During the year, the company sold business assets held long-term at a gain. Which is TRUE about the
Youthglow Products, Incorporated is a C corporation. During the year, the company sold business assets held long-term at a gain. Which is TRUE about the tax treatment of the gains?
Youthglow Products will pay 21% tax on the gains on Form 1120.
The gain will be passed through to the shareholders' returns on Schedule K-1 (Form 1120) and taxed on Form 1040 as long-term capital gain.
The gain will be allocated between all shareholders who perform services for the company and included in Form W-2 wages.
Proceeds from the sale are included in Youthglow Products' gross receipts. Adjusted basis of the assets is included in cost of goods sold (COGS) on Form 1120-S.
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