Identify a true statement about an S corporation.
A)An S Corporation is required to have more than 100 stockholders.
B)An S Corporation is required to have more than one type of stock outstanding.
C)The income of an S Corporation passes through the company to the owners.
D)The income of an S Corporation is taxed twice, at the corporate level and the owner level.
E)The income of an S Corporation is taxed as capital gains to the owners.

Question

Identify a true statement about an S corporation. 
A)An S Corporation is required to have more than 100 stockholders.
B)An S Corporation is required to have more than one type of stock outstanding.
C)The income of an S Corporation passes through the company to the owners.
D)The income of an S Corporation is taxed twice, at the corporate level and the owner level.
E)The income of an S Corporation is taxed as capital gains to the owners.

Quizplus · Accepted Answer

An S Corporation is a type of corporation that passes its income, losses, deductions, and credits through to its shareholders for federal tax purposes. This means that the income of the corporation is not taxed at the corporate level, but instead, it is only taxed at the individual shareholder level. The shareholders report the income and losses on their individual tax returns and pay taxes on them accordingly. S Corporations are limited to 100 shareholders and can only issue one type of stock.

Identify a True Statement About an S Corporation