Katherine, the Sole Shareholder of Penguin Corporation, Has the Corporation

question 98

True/False

Katherine, the sole shareholder of Penguin Corporation, has the corporation pay her a salary of $300,000 in the current year. The Tax Court has held that $90,000 represents unreasonable compensation. Katherine has avoided double taxation only to the extent of $210,000 (the portion of the salary that is considered reasonable compensation).

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Definitions:

Budget Constraint

The limitations on the consumption choices of an individual or household given their income and the prices of goods and services.

DVD

A digital versatile disc (DVD) is a type of optical storage media used for video, audio, and data storage.

CD

A compact disc, a small plastic disc used to store data digitally, including music, images, or software.

Budget Constraint

The limits on the consumption bundles that a consumer can afford, based on their income and the prices of goods and services.