Question

Action Sport is an S corporation owned equally by three shareholders. During the current year, Action Sport generated taxable income of $60,000. What is the tax treatment, if any, of the $60,000 income?

Answer 1

Answer and explanation:

S Corporations are entities that meet certain criteria given by the Internal Revenue Service (IRS). S corporations are called pass-through corporations since they do not pay income taxes. The S corporations' shareholders must file the taxes according to their income share perceived.

In that case, Action Sport will not have to file any tax return but its shareholders will according to the allocation of the revenues perceived ($60,000).