Wallace Corporation Needs an Additional Worker on a Multiyear Project

question 17

Multiple Choice

Wallace Corporation needs an additional worker on a multiyear project.It could hire an employee for a $30,000 annual salary.Alternatively,it could engage an independent contractor for a $35,000 annual fee.Which of the following is true?

• A)Wallace must withhold payroll tax from the salary or the fee.
• B)Wallace must withhold federal and state income tax from the salary or the fee.
• C)Wallace must issue a Form W-2 to the employee or the independent contractor.
• D)None of the above is true.

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Definitions:

Assignable

Capable of being transferred or made over to the legal control of another party, commonly referring to rights or property under contract.

Donee Beneficiary

A third party who stands to benefit from the execution of a contract, although not a direct party to the agreement.

Life Insurance

A contract between an insurer and a policyholder in which the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of the insured person.

Public Interest

Public Interest refers to the welfare or well-being of the general public and society at large.