Agnes Is the Sole Shareholder of Violet,Inc

question 10

Multiple Choice

Agnes is the sole shareholder of Violet,Inc.For 2011,she receives from Violet a salary of $200,000 and dividends of $100,000.Violet's taxable income for 2011 is $500,000.On audit,the IRS treats $50,000 of Agnes's salary as unreasonable.Which of the following statements is correct?

• A) Agnes's gross income will increase by $50,000 as a result of the IRS adjustment.
• B) Violet's taxable income will not be affected by the IRS adjustment.
• C) Agnes's gross income will decrease by $50,000 as a result of the IRS adjustment.
• D) Violet's taxable income will increase by $50,000 as a result of the IRS adjustment.
• E) None of the above is correct.

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Definitions:

Lymph Nodes

Small, bean-shaped structures that are part of the body's lymphatic system, crucial in filtering lymph and combating infections.

Tricuspid Valve

A valve in the human heart that lies between the right atrium and the right ventricle, regulating blood flow.

Right Atrium

The upper right chamber of the heart that receives deoxygenated blood from the body and pumps it to the right ventricle.

Diastole

The phase of the heartbeat when the heart muscle relaxes and allows the chambers to fill with blood.