Betty has formed Bicycle Fish, Inc., a California S corporation, of which Betty is the majority shareholder. It’s been a mixed year. First, Bert sued the Fish for breach of contract. Second, the Fish had profits, but Betty was forced to leave them in the corporation’s operating account. What are the consequences of these two things for the corporation?

Select one:

a. No contractual liability; no tax liability for profits

b. No contractual liability; tax liability for profits

c. Contractual liability; no tax liability for profits

d. Contractual liability; tax liability for profits

Answer rating: 100% (QA)

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