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Hedeon is the sole owner of Cliff Company. For 2023, the only...

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Accounting

Hedeon is the sole owner of Cliff Company. For 2023, the only income of Cliff was a long-term capital gain of $25,000. The business made no distributions during the year to Hedeon. Which of the following statements is true?
a. If Cliff Company is an S corporation, Hedeon will report none of the $25,000 long-term capital gain on his personal tax return.
b. If Cliff Company is a C corporation, a preferential tax rate applies to the $25,000 long-term capital gain.
c. If Cliff Company is a C corporation, Hedeon will report the $25,000 long-term capital gain on his personal income tax return.
d. If Cliff Company is a sole proprietorship, Hedeon must report the $25,000 long-term capital gain on his personal income tax return.
e. If Cliff Company is an S corporation, the S corporation must pay tax on the $25,000 long-term capital gain at a flat rate of 21%.

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