Foggy Bottom Corp., an S corporation, recognized net long-term capital gains during the year. If the capital gains are simply lumped together with ordinary business income on Schedule K-1, then the shareholders are going to report the income as ordinary and, as a result, fail to enjoy the preferential tax rates on long-term capital gains. Instead, the S corporation will report the capital gains as one of its on Schedule K-1

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Foggy Bottom Corp an S corporation recognized net longterm cap... View the full answer