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Tomas owns a sole proprietorship, and Lucy is the sole sharehalder of a C corporation. In the current year, both businesses m

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Answer #1

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Both the businesses make net profit of $60000. But neither business distribute any fund to owner.

The income tax returns for sole proprietorship firm is same as that of the income tax rate of individual.in sole proprietorship firm there is no seperation of ownership and management.so Mr Thomas must report $60000 of income on his individual tax return. But Lucy is not required to report any income on her individual tax return. As she is the owner/shareholder of a corporation and as a owner she doesn't get any dividend as both the businesses neither distribute any income to the owner.

Hence Lucy is not required to report any income on his individual tax return.

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