This Is a Loan from the Company to the Employee

question 26

Multiple Choice

This is a loan from the company to the employee that is carried forward indefinitely until the employee sells enough to repay it.

• A) commission-plus-draw plan
• B) a recoverable draw
• C) a non-recoverable draw
• D) an interest-free loan

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Definitions:

Social Security Tax

Social Security tax is a payroll tax collected to fund the Social Security program, which provides retirement, disability, and survivorship benefits to qualifying individuals.

Federal Personal Income Tax

A tax levied by the U.S. federal government based on an individual's income, including wages, salaries, and investments.

Taxable Income

The portion of an individual's or entity's income used to determine how much tax is owed to the government.

Marginal Tax Rate

The amount of tax paid on an additional dollar of income, which varies depending on income levels and tax brackets.