Foster Owns 27% of the Baxter Corporation, Whose Ordinary Income $\begin{array} { c l } \text { Corporation } & \text { S Corporation } \\\end{array}$

question 13

Short Answer

Foster owns 27% of the Baxter Corporation, whose ordinary income is $100,000. His salary for the year is $50,000. What amount must Foster pay in Social Security taxes if Baxter is a(n)
?
$\begin{array} { c l } \text { Corporation } & \text { S Corporation } \\\end{array}$
A) $\begin{array} { c l } \$ - 0 - &&&& \$ 3,825 \\\end{array}$
B) $\begin{array} { c l } \$ 3,825 &&&& \$ - 0 - \\\end{array}$
C) $\begin{array} { c l } \$ 3,825 &&&& \$ 3,825 \\\end{array}$
D) $\begin{array} { c l } \$ 3,825 &&&& \$ 7,650 \\\end{array}$
E) $\begin{array} { c l } \$ 3,825 &&&& \$ 11,475\end{array}$

• A)\(\begin{array} { c l } \$ - 0 - &&&& \$ 3,825 \\\end{array}\)
• B)\(\begin{array} { c l } \$ 3,825 &&&& \$ - 0 - \\\end{array}\)
• C)\(\begin{array} { c l } \$ 3,825 &&&& \$ 3,825 \\\end{array}\)
• D)\(\begin{array} { c l } \$ 3,825 &&&& \$ 7,650 \\\end{array}\)
• E)\(\begin{array} { c l } \$ 3,825 &&&& \$ 11,475
• \end{array}\)

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Definitions:

Unitary Government

A centralized form of government where all governmental powers are held by a single central authority, with little or no delegation to subdivisions.

Federalism

A political system where power is divided between a central (national) government and regional (state or provincial) governments.

Unitary Government

A system of government where all governmental authority is vested in a single central government, with any regional units exercising only powers that the central government delegates.

James Madison

An American statesman, diplomat, and the fourth President of the United States, known as the "Father of the Constitution" for his pivotal role in drafting and promoting the U.S. Constitution and the Bill of Rights.