If Part of a Shareholder/employee's Salary Is Classified as Unreasonable

question 44

Essay

If part of a shareholder/employee's salary is classified as unreasonable, determine the effect on the:
a. Shareholder/employee's gross income.
b. Corporation's taxable income.

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Definitions:

Nash Equilibria

A situation in a non-cooperative game where no player can benefit by changing strategies, assuming the other players also don't change their strategies.

Maximin Strategy

A decision rule in game theory that aims to maximize the minimum gain possible from a set of strategies.

Dominant Strategy

In game theory, a strategy that is best for a player, regardless of the strategies chosen by other players.

Nash Equilibria

A concept in game theory where no participant can gain by unilaterally changing their strategy if the strategies of others remain unchanged.