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0:4-37 Disguised Dividends. King Corporation is a profitable manufacturing concern with $800,000 of E&P. It is owned in equal shares by Harry and Wilma, husband and wife Both individuals are actively involved in the business. Determine the tax consequences of the following independent events: a. In reviewing a prior year tax return for King, the IRS determines that the $500,000 of salary and bonuses paid to Wilma is unreasonable and that reasonable compensation is $280,000 b. King loaned Harry $400,000 over the past three years. None of the money has been repaid. Harry does not pay interest on the loans. c. King sells a building to Wilma for $150,000 in cash. The property has an adjusted basis of $90,000 and is subject to a $60,000 mortgage, which Wilma assumes. The FMV of the building is $350,000. d. Harry leases a warehouse to King for $50,000 per year. According to an IRS auditor similar warehouses can be leased for $35,000 per year. e. Wilma sells to King for $250,000 land on which King intends to build a factory According to a recent appraisal, the FMV of the land is $185,000. f. The corporation owns an airplane that it uses to fly executives to business meetings. When the airplane is not being used for business, Harry and Wilma use it to travel to their ranch in Idaho for short vacations. The approximate cost of their trips to the ranch in the current year is $8.000, Tumasonable Compensation. Forward Corporation is owned by a group of 15 sharehold- S550,000 in salary and bonuses to Alvin, its 11 and lyin's mar