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  3. review the tax return for the business (form 1120s

Review the tax return for the business (Form 1120S) and the K1 for Morty. Jerry...

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Accounting

Review the tax return for the business (Form 1120S) and the K1 for Morty. Jerry decides that no distributions will
be made, and since he has 52% of the vote, it appears that he has majority vote. For this question, assume that
the operating agreement says that distributions will be voted on based on Membership Ownership percentage.
Which of the following is true.
Morty will be pay income tax on his individual return for $90,000 of income.
( $90,000 Morty's effective tax rate).
Morty will be allocated $21,600 of income that will be taxed on his individual tax
return ( $21,600 Morty's effective tax rate).
The business will distribute $21,600 of cash to Morty.
The business will pay income tax on $90,000 of income.
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