[jessanqi]

Wheeler Corporation, a Subchapter S corporation, has two equal shareholders. During the year, Wheeler had taxable income of $10,000. Included in the above is $20,000 excess net long-term capital gain over net short-term capital loss. Wheeler distributed $7,500 cash to each shareholder during the year. What amount should each shareholder report on his or her individual income tax return for the year as long-term capital gain passed through from Wheeler?

The answer is $5,000.

I don’t really understand this question, what does it mean “included in the above is $20,000 excess net LT capital gain over net short term capital loss?” the net capital should be also included in the taxable income right? Does this sentence is just a distraction?

Can someone please kindly advise! thank you soso much!