Which of the Following Is Not a True Statement

question 45

Multiple Choice

Which of the following is not a true statement?

• A)For shareholder-employees who own 2 percent or less of the entity,the S corporation gets a tax deduction for qualifying fringe benefits,and the benefits are nontaxable to the employees.
• B)For shareholder-employees who own more than 2 percent of the S corporation,the S corporation gets a tax deduction,but the otherwise qualifying fringe benefits are taxable to the more-than-2-percent shareholder-employees.
• C)S corporation owners have a tax incentive to pay themselves a low salary.
• D)An S corporation shareholder's allocable share of ordinary business income (loss)is not classified as self-employment income for tax purposes.
• E)None of the choices are false.

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Definitions:

Lease Liability

An obligation representing the present value of future lease payments that a lessee is committed to pay over the lease term.

Mortgage Notes Payable

A legal document indicating the amount of a mortgage loan and the terms under which it is to be repaid.

Contractual Interest Rate

The agreed-upon interest rate specified in a loan or bond contract, which the borrower must pay to the lender.

Market Interest Rate

The prevailing rate of interest determined by supply and demand in the financial markets.