Laura,the Controlling Shareholder and an Employee of Southwest Corporation,receives an Annual

question 122

Multiple Choice

Laura,the controlling shareholder and an employee of Southwest Corporation,receives an annual salary of $750,000.Based on several factors including the size of the corporation's operations and a comparison of salary received by officers of comparably-sized corporations,the IRS contends that Laura's salary should be no higher than $600,000.The Court upheld the IRS's position.As a result,which of the following is true?

• A)$600,000 is deductible by the corporation; $600,000 is taxable to Laura.
• B)$600,000 is deductible by the corporation; $750,000 is taxable to Laura.
• C)$750,000 is deductible by the corporation; $750,000 is taxable to Laura.
• D)$750,000 is deductible by the corporation; $600,000 is taxable to Laura.

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Definitions:

Job Description

A formal document outlining the duties, responsibilities, required qualifications, and reporting relationships of a specific job.

Observers

Individuals or entities that watch, monitor, or record activities or data without directly participating.

Safety-related Risk Factors

Elements or conditions in the workplace that can increase the likelihood of accidents, injuries, or health issues.