Wilma Is CEO of and Owns 100 Percent of WT

question 21

Multiple Choice

Wilma is CEO of and owns 100 percent of WT Enterprises,a cash-basis,calendar-year corporation.The company has always been profitable but over the last five years Wilma's salary has increased from over $400,000 per year to over $1,000,000 and it has failed to pay dividends.Which of the following will not occur if the IRS determines that $500,000 of her salary is unreasonable?

• A)Wilma will pay an additional tax on the $500,000 recharacterized as dividend.
• B)Wilma will be eligible for a refund of Medicare taxes.
• C)WT will lose a $500,000 deduction for the recharacterized dividend.
• D)WT will be eligible for a refund of a portion of FICA taxes paid.

---

Definitions:

Elderly People

Individuals typically aged 65 years and over, often characterized by increased experience, wisdom, and varying degrees of physical and cognitive changes.

Alzheimer's Disease

A progressive neurological disorder characterized by memory loss, cognitive decline, and personality changes, leading to the inability to function independently.

Stroke

A medical condition where the blood flow to the brain is interrupted or reduced, leading to cell death.

Beta Amyloid

A protein fragment that accumulates in the brain, often associated with the development of Alzheimer's disease.