During the Current Year, Walter Invests $35,000 in Each of Two

Multiple Choice

During the current year, Walter invests $35,000 in each of two separate corporations. Each investment gives him a 20% ownership interest. Corporation X is a C corporation that has taxable income of $200,000 and pays dividends totaling $50,000. Corporation Z is an S corporation that has taxable income of $100,000 and pays $50,000 of dividends. As a result of these two investments, Walter
I.Has $10,000 of taxable income from Corporation X.
II.Has $10,000 of taxable income from Corporation Z.
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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.