An entity has the following income for the current year

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Reference no: EM13925260

An entity has the following income for the current year:

Operations $92,000

Tax-exempt interest income 19,000

Long-term capital gain 60,000

The entity has earnings and profits (AAA for an S corporation) of $900,000 at the be-ginning of the year.

A distribution of $200,000 is made to the owners.

a. Calculate the taxable income if the entity is (1) a C corporation and (2) an S corporation.

b. Determine the effect of the distribution on the shareholders if the entity is (1) a C corporation and (2) an S corporation.

Reference no: EM13925260

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