Which of the Following Would Not Be a Successful Means

question 63

Multiple Choice

Which of the following would not be a successful means of avoiding double tax on the earnings of a closely-held corporation?

• A) Having a shareholder lend money to the corporation at a reasonable rate of interest.
• B) Having a shareholder lease warehouse space to the corporation at a reasonable rental rate.
• C) Having the corporation pay the shareholder a fixed percentage of the par value of the stock the shareholder owns.
• D) Having the corporation employ the shareholder at a reasonable compensation.

---

Definitions:

Lawful Maximum

The highest limit allowed by law, often referring to interest rates, fees, or other financial charges.

Interest Rate

An Interest Rate is the percentage charged on the total amount of borrowed money or paid on savings, over a specific period of time.

Legally Binding

A term applied to agreements or contracts that have legal force, meaning they are enforceable by law.

Contracts

Legally enforceable agreements between two or more parties that create mutual obligations.