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Unformatted text preview: ion that passes through to the shareholder. CPA-04728 Type1 M/C A-D Corr Ans: D PM#15 R 3-02 90. CPA-04728 Released 2005 Page 48
Boles Corp., an accrual-basis calendar-year S corporation, has been an S corporation since its inception
and is not subject to the uniform capitalization rules. In the current year, Boles recorded the following:
Dividend income from investments
Utilities expense $50,000
1,500 What amount of net business income should Boles report on its 2003 Form 1120S, U.S. Income Tax
Return for an S corporation, Schedule K?
Choice "d" is correct. An S corporation reports both separately stated and non-separately stated (net
business) items of income. The dividend income is a separately stated item and is not included in the
calculation of net business income. Therefore, net business income is calculated as follows:
Net business income $50,000...
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