Which of the Following Is Not a True Statement

question 106

Multiple Choice

Which of the following is not a true statement?

• A) For shareholder-employees who own 2 percent or less of the entity, the S corporation gets a tax deduction for qualifying fringe benefits, and the benefits are nontaxable to the employees.
• B) For shareholder-employees who own more than 2 percent of the S corporation, the S corporation gets a tax deduction, but the otherwise qualifying fringe benefits are taxable to the more-than-2-percent shareholder-employees.
• C) S corporation owners have a tax incentive to pay themselves a low salary.
• D) An S corporation shareholder's allocable share of ordinary business income (loss) is not classified as self-employment income for tax purposes.
• E) None of these statements is false.

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Definitions:

Distributors

Entities that purchase products from manufacturers and sell them to retailers or consumers, acting as intermediaries in the supply chain.

Labor Unions

Organizations that represent the collective interests of workers in negotiations with employers over wages, work conditions, and rights.