Zana Corp is a calendar year S corporation. Pack Corp, a C corporation, became a

Question

Zana Corp is a calendar year S corporation. Pack Corp, a C corporation, became a shareholder in Zana on September 4, 20X4 (the 247th day of the calendar year). During 20X4, Zana reported nonseparately computed income of $182,500. Assuming no special elections are made, which scenario below describes the correct way to report Zana's income for the 2014 tax years?

Zana should file a full year S corporation tax return reporting the entire income of $182,500

Zana should file a full year C corporation tax return reporting the entire income of $182,500

Zana should file a partial year S corporation tax return reporting income of $59,500 and a partial year C corporation tax return reporting income of $123,000

Zana should file a partial year S corporation tax return reporting income of $123,000 and a partial year C corporation tax return reporting income of $59,500

Explanation / Answer

Zana should file a full year S corporation tax return reporting the entire income of $182,500, because c corporation is only a shareholder status of s corporation is not changed at all.

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