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14 June, 16:04

Rajib is the sole shareholder of Cardinal Corporation, a calendar year S corporation. In the current year, Cardinal generated a net profit of $350,000 ($520,000 gross income - $170,000 operating expenses) and distributed $80,000 to Rajib. Rajib must report the Cardinal Corporation profit of $350,000 on his Federal income tax return. True or false?

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  1. 14 June, 16:22
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    True

    Explanation:

    Given that

    Gross income = $520,000

    Operating expenses = $170,000

    So, the net income is

    = Gross income - Operating expenses

    = $520,000 - $170,000

    = $350,000

    The net income value or profit would be reported i. e $350,000 when the Rajib is filling his Federal income tax return.

    Therefore, the given statement is true.
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