Amber Company has $100,000 in net income in 2013 before deducting any compensation or other payment to its sole owner,Alfredo.Assume that Alfredo is in the 33% marginal tax bracket.Discuss the tax aspects of each of the following independent arrangements.(Assume that any salaries are reasonable in amount and ignore any employment tax considerations.)
Definitions:
Promise
An assurance given by one party to another, agreeing to do or not do something specified in the future.
Consideration
Consideration is a fundamental principle in contract law, referring to something of value exchanged between parties as part of an agreement.
Legal Value
Consideration or benefit recognized by law as sufficient to form a valid contract or enforceable obligation.
Gross Inadequacy
An extreme lack of sufficiency or competence in performance or provision, often referenced in legal contexts concerning contractual or fiduciary obligations.
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