Carole Owns 75% of Pet Foods,Inc

question 35

Multiple Choice

Carole owns 75% of Pet Foods,Inc.As CEO,Carole must travel extensively and does so on the company jet.In addition,she also uses the jet to take several personal vacations.Carole reports the value of the personal use of the jet,$40,000,as additional compensation.Which of the following is true in terms of the corporation?

• A)The corporation includes $40,000 as miscellaneous income.
• B)The $40,000 has no impact on the corporation's income tax.
• C)The corporation takes a deduction of $40,000 for compensation expense.
• D)The corporation takes a deduction of $40,000 for dividend expense.

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Definitions:

Sensorimotor Stage

In Piaget’s theory, the stage (from birth to nearly 2 years of age) during which infants know the world mostly in terms of their sensory impressions and motor activities.

Piaget

A Swiss psychologist renowned for his pioneering work in child development and his theory of cognitive development which describes how children construct a mental model of the world.

Concrete Operational

Pertains to a stage in Piaget's theory of cognitive development, where children gain the ability to think logically about concrete events.

Formal Operational

The stage of cognitive development in which people start to think logically about abstract concepts.