The IRS Has Developed a Three-Prong Test to Determine an Agent's

question 57

Multiple Choice

The IRS has developed a three-prong test to determine an agent's status.Which of the following is not a prong in this test?

• A) Whether the working relationship is written or oral.
• B) Behavioral aspects of the agency.
• C) The type of working relationship between the principal and the agent.
• D) The financial arrangements between the principal and the agent.

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Definitions:

Cost Structure

The relative proportion of fixed, variable, and mixed costs in an organization.

Advertising Budget

The allocation of funds toward promotional activities intended to communicate the value of products or services to customers.

Variable Costs

Costs that change in proportion to the level of activity or production volume, such as materials and labor directly involved in production.

Fixed Expenses

Expenses that remain constant regardless of any variations in the amount of goods produced or the volume of sales, like lease payments, wages, and insurance fees.