15) Laura, the controlling shareholder and an employee of Southtown 5) r annual salary of $750,000 Based on several factors including the size of the corpton operations and a comparison of salary received by officers of comparably sized corporations the IRS contends that Laura's salary should IRS's position. As a result, which of the following is true? 5600,000 is deductible by the corporation: $750,000 is taxable to Laura 750,000 is deductible by the corporation $600,000 is taxable to Laura C) $60,000 is deductible by the corporation S600000 is taxable to Lasara. D) $750,000 is deductible by the corporation $750,000 is taxable to Laura be no higher than 5600,000. The Court upheld the must travel extensively and does so on I vacations. Carole reports Which of the the 16) 16) Carole owns 75% of Tet Foods, Inc. As CEO Carole company jet. In addition, she also uses the jet to take several persona the value of the personal use of the jet, 540,000, as additional following is true in terms of the corporation? The corporation takes a deduction of $40,000 for compensation expense. corporation includes $40,000 as miscellaneous income. C) The corporation takes a deduction of $40,000 for dividend expense. D) The $40,000 has no impact on the corporation's income tax. 17) Mark and his brother, Rick, each own farms. Rick is experiencing and cannot afford to buy feed for his cattle. Mark purchases $2,000 of feed and gives one-half of the feed. Mark tells Rick that there is no need to repay a gift. Which of the following statements is true? Rick must report $1,000 as income. severe financial difficulties him and to consider the feed B) Mark can deduct $2,000 for the feed. D) None of the above is true. TRUEFALSE. Write T if the statement is true and F if the statement is false. 18) Kickbacks and bribes paid to federal officials are deductible only if related to trade or business. 19) Kaitlyn owns a hotel in Phoenix, Arizona. The city of Phoenix has proposed legislation to increase the hotel room tax. Kaitlyn incurs $1,000 of lobbying expenses to discourage passage of the legislation. Kaitlyn can deduct the $1,000. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the q 20) Emeril borrows $340,000 to finance taxable and tax-exempt investments. He incurs $18,000 investment interest expense, allocated equally between the taxable and tax-exempt investments. Ignore any possible investment interest expense limitation. How much of the interest expense is deductible, and where is it deductible? A) $18,000 from AGI C) $9,000 for AGI )$18,000 for AGI D) $9,000 from AGI