Patrick, an Attorney, Is the Sole Shareholder of Gander Corporation

question 19

Multiple Choice

Patrick, an attorney, is the sole shareholder of Gander Corporation, a C corporation. Gander is a personal service corporation with a fiscal year ending November 30 (pursuant to a § 444 election) . The corporation paid Patrick a salary of $180,000 during its fiscal year ending November 30, 2016. How much salary must Gander pay Patrick during the period December 1 through December 31, 2016, to permit the corporation to continue to use its fiscal year without negative tax effects?

• A)$0
• B)$30,000
• C)$165,000
• D)$180,000
• E)None of the above

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Definitions:

Overhead Costs

Indirect costs that cannot be directly attributed to specific products or services, such as utilities, rent, and managerial salaries.

Decision-making Model

A structured approach to making choices among alternatives, often involving steps such as problem identification, alternative generation, and evaluation.

Special Order

A one-time customer order for a product or service, often requiring a unique set of specifications or considerations outside regular offerings.

Idle Capacity

Unused or underused production capability, which occurs when a business has more resources available than is required to maintain its current level of production.