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:

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The lowest level of acceptable quality or performance in a given area, often set by regulatory bodies.

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Equipment and software specifically designed for use in a profession or trade to carry out job duties more efficiently.

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A collection of laws and regulations that govern the process by which individuals, businesses, and other entities declare inability to repay their debts.

Reorganization Plan

A strategic plan developed to restructure a company's debts and operations with the aim of emerging from financial distress, often used in bankruptcy proceedings.