Asked by Katherine Fafian on Jul 02, 2024
Verified
A shareholder of a Subchapter S corporation is required to personally report his or her proportionate share of corporate net income.
Subchapter S Corporation
A Subchapter S Corporation is a form of corporation that meets specific Internal Revenue Code requirements, allowing it to pass income directly to shareholders and avoid double taxation.
Corporate Net Income
The amount of profit a company has earned during a specific period after all expenses, taxes, and costs have been subtracted from total revenue.
Proportionate Share
A portion or percentage of an entity or amount that corresponds to an individual's part in the whole.
- Differentiate the tax frameworks of Subchapter S corporations from those of partnerships.
Verified Answer
IT
Ifeyinwa Thompson4 days ago
Final Answer :
True
Explanation :
Subchapter S corporations are pass-through entities, meaning that the profits and losses of the corporation pass through to the shareholders who report them on their personal tax returns. Shareholders are required to report their proportionate share of corporate net income, whether or not the corporation actually distributes that income to them.
Learning Objectives
- Differentiate the tax frameworks of Subchapter S corporations from those of partnerships.