Final answer:
For an S corporation, separately stated items include corporate income tax, individual income tax on salary, and payroll tax on wages. Each shareholder must report their share of the corporate income tax on their individual tax return, and the owner must pay individual income tax on their salary and payroll tax on their wages.
Step-by-step explanation:
For an S corporation, the separately stated items are those that are passed through to the shareholders and reported on their individual tax returns. One of these items is the corporate income tax on the profits of the S corporation. Unlike a regular corporation, where the corporation pays the taxes, an S corporation passes the tax burden onto the shareholders. This means that each shareholder must report their share of the corporate income tax on their individual tax return.
In addition to the corporate income tax, an individual who owns a corporation for which he is the only employee must also pay individual income tax on his salary. This is because the salary earned by the owner is considered personal income and is subject to regular income tax rates.
Lastly, the owner of an S corporation who is also the only employee must pay payroll tax on the wages he pays himself. Payroll taxes include Social Security and Medicare taxes, which are split between the employee and the employer. In the case of an S corporation where the owner is the only employee, they are responsible for both the employee and employer portions of the payroll tax.