Jennifer Owns 60% of the Stock in Heath Corporation

Multiple Choice

Jennifer owns 60% of the stock in Heath Corporation. During the current year, Heath Corporation has taxable income of $80,000 and pays dividends of $30,000. Which of the following statements about Jennifer's income from Heath Corporation is/are correct?
I.If Heath Corporation is an S corporation, Jennifer must recognize $48,000 of income.
II.If Heath Corporation is a corporation, Jennifer must recognize $18,000 of income.
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A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.