Aaron, a Shareholder-Employee of Pigeon, Inc

question 57

True/False

Aaron, a shareholder-employee of Pigeon, Inc., receives a $300,000 salary.The IRS classifies $100,000 of this amount as unreasonable compensation.The effect of this reclassification is to decrease Aaron's gross income by
$100,000 and increase Pigeon's gross income by $100,000.

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Definitions:

Punishments

Consequences applied with the intent of reducing or eliminating an undesirable behavior by creating a negative experience.

Authority

This is the legitimate power or right given to an individual or entity to make decisions, direct others, and enforce obedience.

Arthur Andersen

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