Which of the Following Is Not an Effective Strategy for Mitigating

question 33

Multiple Choice

Which of the following is not an effective strategy for mitigating the double tax associated with C corporations?

• A) Paying a salary to a shareholder-employee.
• B) Leasing property from a shareholder.
• C) Borrowing money from a shareholder.
• D) Paying fringe benefits to a shareholder-employee.
• E) All of the choices are effective strategies for mitigating double taxation.

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Definitions:

Salary

A fixed regular payment, typically paid on a monthly or biweekly basis by an employer to an employee, especially a professional or white-collar worker.

Real Interest Rates

The rate of interest an investor expects to receive after allowing for inflation, reflecting the true cost of borrowing and the true yield on savings.

Nominal Interest Rates

The stated rate of interest on a loan or investment, not adjusted for inflation.

CPI

Consumer Price Index, a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.