Carole Owns 75% of Pet Foods,Inc

question 35

Multiple Choice

Carole owns 75% of Pet Foods,Inc.As CEO,Carole must travel extensively and does so on the company jet.In addition,she also uses the jet to take several personal vacations.Carole reports the value of the personal use of the jet,$40,000,as additional compensation.Which of the following is true in terms of the corporation?

• A)The corporation includes $40,000 as miscellaneous income.
• B)The $40,000 has no impact on the corporation's income tax.
• C)The corporation takes a deduction of $40,000 for compensation expense.
• D)The corporation takes a deduction of $40,000 for dividend expense.

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Definitions:

Early-stage Financing

Capital provided to startups and young companies to fund initial operations, product development, and market research, often in exchange for equity.

Entrepreneurs

Individuals who take the risk of starting and managing a business venture to capitalize on innovative ideas or products.

Business Concept

An idea for a business that includes basic information on the product, service, target market, and competition.

Startups

Newly established businesses, typically in the early stages of operation, often aimed at addressing a novel or untapped market need.