Laura,the Controlling Shareholder and an Employee of Southtown Corporation,receives an Annual

question 93

Multiple Choice

Laura,the controlling shareholder and an employee of Southtown Corporation,receives an annual salary of $750,000.Based on several factors including the size of the corporation's operations and a comparison of salary received by officers of comparably sized corporations,the IRS contends that Laura's salary should be no higher than $600,000.The Court upheld the IRS's position.As a result,which of the following is true?

• A)$600,000 is deductible by the corporation; $600,000 is taxable to Laura.
• B)$600,000 is deductible by the corporation; $750,000 is taxable to Laura.
• C)$750,000 is deductible by the corporation; $750,000 is taxable to Laura.
• D)$750,000 is deductible by the corporation; $600,000 is taxable to Laura.

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Definitions:

Tactical Partner

An alliance or partnership formed for strategic advantages, focusing on specific objectives or goals.

Corporate Customer

A business entity or organization that purchases goods or services for business use rather than for individual or personal use.

Salesperson's Contact

A sales strategy involving direct communication and personal interaction between a salesperson and a prospective or current customer.

Prospect

A potential customer or client who has been identified as fitting a certain criteria that may lead to them purchasing a product or service.