Juanita owns 45% of the stock in a C corporation that had a profit of $120,000 in 2010. Carlos owns a 45% interest in a partnership that had a profit of $120,000 during the year. The corporation distributed $20,000 to Juanita, and the partnership distributed $20,000 to Carlos. Which of the following statements relating to 2010 is incorrect? Answer Juanita must report $20,000 of income from the corporation. The corporation must pay corporate tax on $120,000 of income. Carlos must report $20,000 of income from the partnership. The partnership is not subject to a Federal entity-level income tax.

Dividend income is taxable as capital gains, but for some types of dividends, the current federal tax rates on dividends in the U.S. are lower than you'll pay on other types of income.

2. The corporation must pay corporate tax on $120,000 of income.

The United States taxes the profits of US resident C corporations (named after the relevant subchapter of the Internal Revenue Code)

3. Carlos must report $20,000 of income from the partnership.

A Partnership Is Not Taxed as a Business Entity

This means that each partner is responsible for paying taxes according to their individual share of profits or losses on their individual tax returns.

4. The partnership is not subject to a Federal entity-level income tax.

A Partnership Is Not Taxed as a Business Entity

This means that each partner is responsible for paying taxes according to their individual share of profits or losses on their individual tax returns.