Torsten owns 100% of Taupe Corporation, which had net operating income of $420,000 and long-term capital gain of $30,000 in 2015. Torsten has sufficient income from other sources to be in the 39.6% marginal tax bracket without regard to the results of Taupe Corporation. The corporation makes no distributions to Torsten during the year. Ignoring the 3.8% Medicare surtax on net investment income, explain the tax treatment if Taupe Corporation is:

a. An S corporation.

b. A C corporation.