Which of the Following Is Not a True Statement

question 21

Multiple Choice

Which of the following is not a true statement?

• A)For shareholder-employees who own 2 percent or less of the entity, the S corporation gets a tax deduction for qualifying fringe benefits, and the benefits are nontaxable to the employees.
• B)For shareholder-employees who own more than 2 percent of the S corporation, the S corporation gets a tax deduction, but the otherwise qualifying fringe benefits are taxable to the shareholder-employees who own more than 2 percent.
• C)S corporation owners have a tax incentive to pay themselves a low salary.
• D)An S corporation shareholder's allocable share of ordinary business income (loss)is not classified as self-employment income for tax purposes.
• E)None of the choices are false.

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Definitions:

English Rule

A legal principle requiring the losing party in a lawsuit to pay the winner's attorney fees and court costs.

First-Assignment-In-Time Rule

A legal principle that prioritizes the rights of the party that first received a property transfer or assignment over those of subsequent recipients.

American Rule

A legal principle stating that each party in a lawsuit is responsible for paying their own attorney's fees, unless specified otherwise by law.

Public Policy

Public policy refers to the system of laws, regulatory measures, courses of action, and funding priorities concerning a given topic promulgated by a governmental entity or its representatives.