Arthur Is the Sole Shareholder of Purple, Inc

question 24

Multiple Choice

Arthur is the sole shareholder of Purple, Inc.Purple's taxable income before the payment of Arthur's salary is $300,000.Based on this information, Arthur has the corporation pay him a salary of $200,000 and a bonus of
$100,000.A reasonable salary and bonus would be $175,000.Which of the following is correct?

• A)The taxable income of Purple, Inc., is $0 $300,000 - $300,000 salary and bonus).
• B)The taxable income of Purple, Inc., is $100,000 $300,000 - $200,000).
• C)Arthur has salary and bonus income of $300,000.
• D)Arthur has salary and bonus income of $175,000 and dividend income of $125,000.

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Definitions:

Schachter's Two-factor

A theory of emotion that states emotions are composed of two factors: physiological arousal and cognitive label, both of which are necessary to experience emotion.

James-Lange Theory

A theory of emotion suggesting that emotions occur as a result of physiological reactions to events.

Cannon-Bard Theory

A theory of emotion that proposes emotions and bodily responses occur simultaneously, rather than one causing the other.

Attributions

Explanations or reasons given for why things happen, especially in terms of people's behaviors and outcomes.