Which of the Following Is Not a True Statement

question 85

Multiple Choice

Which of the following is not a true statement?

• A) An S corporation shareholder's allocable share of ordinary business income (loss) is not classified as self-employment income for tax purposes.
• B) S corporation owners have a tax incentive to pay themselves a low salary.
• C) 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 more-than-2-percent shareholder-employees.
• D) 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.
• E) None of the choices are false.

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Definitions:

Minimum Wage

The lowest legally enforceable wage that employers can pay their workers, aimed at protecting workers from exploitation.

U-5 Unemployment Rate

A measure of unemployment that includes those who are not working, available to work, and have looked for work within the past 12 months, plus marginally attached workers and those employed part-time for economic reasons.

Unemployment Insurance

A form of government assistance that offers income support to individuals who are unemployed through no fault of their own and meet specific eligibility requirements.

Labor Force Participation Rate

a measure of the active portion of an economy's labor force, calculated as the labor force divided by the total working-age population, expressed as a percentage.