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1.Annie, Joan and Jill are the shareholders and employees of the AJJ Corp. The annual salaries of each are: Annie - $300,000, Joan - $200,000,

1.Annie, Joan and Jill are the shareholders and employees of the AJJ Corp. The annual salaries of each are: Annie - $300,000, Joan - $200,000, and Jill - 100,000. Before bonuses, the corporation has taxable income of $1,000,000. They decide that each of them should get a bonus of $250,000. The corporation deducts the $750,000 as an ordinary and necessary business expense. If the company is audited by the IRS, what issues might the IRS raise, if any? Howe would the company defend itself from the issues raised by the IRS?

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