Atomic Corporation Is Enjoying a Very Profitable Year

question 82

Multiple Choice

Atomic Corporation is enjoying a very profitable year.The board of directors is considering paying either a bonus to the president of the corporation or an extra dividend to the shareholder.Shinil is both the president and the 100% shareholder.Which of the following statements is generally correct with respect to closely held corporations in Atomic's position?

• A)For tax purposes,the corporation will prefer to pay the bonus.
• B)For tax purposes,the corporation will prefer to pay the dividend.
• C)The owner-manager will only be taxed on the bonus,not the dividend.
• D)The corporation's taxable income will be impacted in the same manner by both the bonus and the dividend payments.

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Definitions:

Hexan-1-ol

An organic alcohol with a six-carbon chain, where the hydroxyl (-OH) group is attached to the first carbon, commonly used in perfumes and flavorings.

Di-n-Hexyl Ether

An organic compound formed by the dehydration of hexanol, resulting in an ether linkage between two hexyl groups.

Di-n-Pentyl Ether

An organic compound formed by the dehydration between two pentanol molecules, resulting in an ether linkage.

HBr

Hydrobromic acid, a diatomic molecule consisting of hydrogen and bromine, often used in organic synthesis.