When a corporation elects to be a Subchapter S corporation, which of the following statements is (are) true regarding the federal tax treatment of the corporation's income or loss?
I. The corporation's income is taxed at the corporate level and not the shareholders' level.
II. The shareholders report the corporation's income on their tax returns when the income is distributed to them.
III. The shareholders report the corporation's income on their tax returns even if the income is not distributed to them.
IV. The shareholders generally report the corporation's loss on their tax returns.
a. I only is true.
b. II only is true.
c. III only is true.
d. III and IV only are true.
Answer: d