A Business Has the Following Information: Net Ordinary Income Before $\quad$

Multiple Choice

A business has the following information: Net ordinary income before the
items below are considered $\quad$$\$ 65,000$
Guaranteed compensation to $Z ( \quad18,000 )$
Rental income $\quad$ 20,000
Rental expenses $\quad$$( 27,000 )$
Net income $\quad \$ 40,000$ If Z performs services for the business, which of the following statements is false?

A) Z's self-employment income is $65,000 if the business is a proprietorship.
B) Z's self-employment income is $36,800 if Z is a 40 percent shareholder of an S corporation.
C) Z's self-employment income is $18,000 if Z is a limited partner who receives 40 percent of the profits and losses.
D) Z has no self-employment income if Z is a 40 percent shareholder of a C corporation.