Matt, the Sole Shareholder of Pastel Corporation (A C Corporation)

question 58

True/False

Matt, the sole shareholder of Pastel Corporation (a C corporation), has the corporation pay him a salary of $600,000 in the current year. The Tax Court has held that $200,000 represents unreasonable compensation. Matt must report a salary of $400,000 and a dividend of $200,000 on his individual tax return.

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Definitions:

Underground Stems

Stems that grow beneath the surface of the soil which function in nutrient storage and vegetative reproduction.

Fleshy Leaves

Thickened leaves adapted for water storage, common in plants that live in arid environments.

Bulbs

Underground storage organs, consisting of a short stem surrounded by fleshy scales (leaves), used for plant propagation.

Alternate Leaf

A pattern of leaf arrangement on a stem where each leaf emerges at different points, creating a spiral or alternate configuration.