Rover Corporation is a regular corporation that has not elected S corporation status.

Rover Corporation is a regular corporation that has not elected S corporation status. In 1992, Rover earned $100,000; in 1993, Rover distributes $50,000 to its shareholders. Which of the following best describes the tax consequences to rover and its shareholders?
A. The shareholders are taxed on $100,000 in 1992; Rover is not subject to tax.
B. Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1993.
C. Rover is taxed on $100,000 in 1992; the shareholders are taxed on $50,000 in 1992.
D. Rover is taxed on $100,000 in 1992; the shareholders are not subject to tax.

Solution