Which of the Following Statements Is True Regarding Compensation Paid

question 59

Multiple Choice

Which of the following statements is true regarding compensation paid to an owner of an entity taxed as a partnership who works for the entity?

• A)The compensation is deductible by the entity.
• B)The compensation is self-employment income to the owner-worker.
• C)The entity is not required to withhold FICA tax on the compensation it pays to the owner.
• D)All of these choices are correct.

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Definitions:

Advantages

Positive aspects or benefits associated with a particular situation, product, or service.

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure a loan.

Bankruptcy Laws

Statutes and regulations governing the process by which individuals or entities who are unable to repay debts to creditors may seek relief and reorganize or liquidate assets.

General Goals

Broad, overall objectives or aims that an individual, group, or organization seeks to achieve.