Which of the Following Factors Would Not Be Considered in Determining

question 92

Multiple Choice

Which of the following factors would not be considered in determining if compensation paid to a shareholder/employee is reasonable?

• A) The individual's duties and responsibilities.
• B) What individuals performing in comparable capacities at other companies are paid.
• C) Whether the corporation has a formal compensation policy.
• D) The individual's marginal income tax rate.

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Definitions:

Progressivity

A characteristic of a tax system in which the tax rate increases as the taxable amount increases, placing a larger burden on high-income earners.

Federal Payroll Tax

Taxes imposed by the federal government on the wages of employees, which fund social security and Medicare programs.

Equilibrium Price

The value at which there is a perfect match between how much of a good or service is wanted and how much is provided, leading to a state of market equilibrium.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded.