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.