Ian Contributes $9,000 in Exchange for a 30 Percent Interest

Multiple Choice

Ian contributes $9,000 in exchange for a 30 percent interest in a C corporation.For 2018, the corporation reported a total loss of $35,000 and made no cash distributions.For 2019, the corporation reported net income of $45,000 and made a cash distribution to the shareholders.Ian received $5,000 of this cash distribution in 2019.Ian is in the 24% marginal tax bracket and 15% dividend rate in both 2018 and 2019.How much income tax did Ian save for 2018 as a result of his share of loss from this corporation and how much income tax does Ian pay as a result of his ownership in the corporation for 2019?

A) zero tax savings in 2018 and $750 tax in 2019
B) zero tax savings in 2018 and $3,360 tax in 2019
C) $2,520 tax savings in 2018 and $3,360 tax in 2019
D) $2,520 tax savings in 2018 and $2,550 tax in 2019
E) $2,940 tax savings in 2018 and $3,780 tax in 2019