Which of the Following Is Not an Effective Strategy for Mitigating

question 11

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 these are effective strategies for mitigating double taxation

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Definitions:

Expense Account

An account used to track expenditures or costs incurred by a business or an individual for operational purposes.

Asset Account

An account that tracks resources owned or controlled by a business or individual which have economic value.

Unearned Items

Income received for goods not yet delivered or services not yet provided, considered a liability until the goods or services are delivered.

Adjusting Journal Entry

Adjusting journal entries are made in the accounting records to correct or allocate transactions in the appropriate accounting period for accurate financial reporting.