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Federal Taxation 2016: Chapter 11: S Corporations
During 2015, Emerald Corporation incurs the following transactions.
Net income from operations $125,000
Long-term capital gain from sale of securities 55,000
Short-term capital loss from sale of securities 35,000
Emerald maintains a valid S election and does not distribute any dividends to its sole shareholder, Dakota. As a result, Dakota must recognize:
a) Ordinary income of $125,000 and long-term capital gain of $20,000.
b) Ordinary income of $125,000, long-term capital gain of $55,000, and $35,000 short-term capital loss.
c) Ordinary income of $125,000, long-term capital gain of $55,000, and $3,000 short-term capital loss.
d) Ordinary income of $125,000.
e) None of the above.
Please explain your answer.
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