Question

Bow, Inc., an S corp, has three equal shareholders. For the year ended Dec 31 2009, Bow had taxable income and current earnings and profits of 300K. Bow made distributions totaling 120K during 2009. For 2009, what amount from Bow should be included in each S/H's gross income?a. 140Kb. 100Kc. 60Kd. 40K

Answer 1

option (b) 100K

Step-by-step explanation:

Data provided in the question:

Total number of share holders = 3

Taxable income and current earnings and profits = 300K

Distributions made during 2009 = 120K

Now,

Since the shareholders are equal shareholders in Bow Inc,

Therefore,

The amount from Bow that should be included in each S/H's gross income will be

= ( Taxable income and current earnings and profits ) ÷ (Number of share holders)

= 300K ÷ 3

= 100K

Hence,

the answer is option (b) 100K