Timothy Owns 100% of Forsythia Corporation's Stock

question 88

Essay

Timothy owns 100% of Forsythia Corporation's stock. Corporate employees and annual salaries include Timothy ($300,000); Richard, Timothy's son ($80,000); Rita, Timothy's daughter ($100,000); and Sandy ($120,000). The operation of Forsythia Corporation is shared about equally between Timothy and Sandy (an unrelated party). Richard and Rita are full-time college students at a university about 150 miles away. Forsythia Corporation has substantial
E & P but has not distributed a dividend for the past five years. Discuss problems related to the salary arrangement for Forsythia Corporation.

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Definitions:

Basaltic Lava

A type of lava that is low in silica content, highly fluid, and originates from the partial melting of the upper mantle.

Lava Fountains

Explosive volcanic eruptions that eject lava high into the air in a spectacular display, often from a single vent or fissure.

Pahoehoe Lava

A type of basaltic lava flow with a smooth, unbroken surface that resembles ropey or wrinkled skin, flowing more fluidly than other types.

Aa Lava

A type of lava flow characterized by a rough, jagged surface formed when more viscous lava cools and solidifies.