Red Corporation, a C corporation that has two equal shareholders, earned $450,000 during 2011. Orange Company, a partnership that has two equal partners, earned $450,000 during the year. Red did not make any distributions to its shareholders, and Orange's partners did not make any withdrawals. Contrast the tax treatment of the shareholders of Red Corporation and the partners of Orange Company.

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The Answer of Red Corporation, a C corporation that has two equal shareholders, earned $450,000 during 2011. Orange Company, a partnership that has two equal partners, earned $450,000 during the year. Red did not make any distributions to its shareholders, and Orange's partners did not make any withdrawals. Contrast the tax treatment of the shareholders of Red Corporation and the partners of Orange Company.

Red Corporation, a C Corporation That Has Two Equal Shareholders