Explain tax treatment if Taupe Corporation is S corporation

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Problem - Torsten owns 100% of Taupe Corporation (a calendar year corporation), which had net operating income of $420,000 and long-term capital gain of $30,000 in the current year. Torsten has significant income from other sources and is in the 37% marginal tax bracket without regard to the results of Taupe Corporation. The corporation makes no distributions to Torsten during the year. Ignoring the deduction for qualified business income and the 3.8% Medicare surtax on net investment income, explain the tax treatment if Taupe Corporation is:

a. An S corporation.

b. A C corporation.

Reference no: EM132627240

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