Question 17 of 20.

MOT, an S corporation, is 100% owned by Tyrone. MOT has two other employees, Jack and Jill. How is the compensation for Tyrone, Jack, and Jill treated?

Jack and Jill will receive Form W-2 for their wages. MOT will deduct their wages and its share of payroll taxes on Form 1120-S. Tyrone will receive Schedule K-1 (Form 1120-S) reporting his share of income and his wages.

Jack, Jill, and Tyrone will each receive Form W-2 reporting their wages. MOT will deduct the wages and its share of payroll taxes on Form 1120-S. Tyrone will receive Schedule K-1 (Form 1120-S) reporting his share of income.

Jack, Jill, and Tyrone will each receive Form W-2 reporting their wages. MOT will deduct the wages and its share of payroll taxes for Jack and Jill on Form 1120-S. Tyrone will receive Schedule K-1 (Form 1120-S) reporting his share of income.

Jack, Jill, and Tyrone will each receive Form W-2 reporting their wages. MOT will deduct Jack and Jill's wages and its share of payroll taxes for Jack and Jill on Form 1120-S. Tyrone will receive Schedule K-1 (Form 1120-S) reporting his share of income.

Question 18 of 20.

Victor is a more than 2% owner of an S corporation and an employee. The S corporation pays his health insurance. How would this be treated by the S corporation and by Victor?

The S corporation would deduct Victor's wages as either wages or officer compensation and the health insurance on line 18, Employee benefit programs. Victor would receive Form W-2 with his wages reported.

The S corporation would deduct Victor's wages as either wages or officer compensation and the health insurance on line 18, Employee benefit programs. Victor would receive Form W-2 with his wages reported and take an adjustment on Schedule 1 (Form 1040) for health insurance.

The S corporation would deduct Victor's wages as either wages or officer compensation and the health insurance on line 18, Employee benefit programs. Victor would receive Form W-2 with his wages and the amount paid for Victor's health insurance reported on it and take an adjustment on Schedule 1 (Form 1040) for health insurance.

The S corporation would include in Victor's wages the amount it paid for health insurance and deduct the total as either wages or officer compensation. Victor would receive Form W-2 with his wages reported and take an adjustment on Schedule 1 (Form 1040) for health insurance.

Question 19 of 20.

Marty, Nathan, and Oliver form MNO Mechanics, LLC. They make no elections so the LLC will default to a partnership. They agree that Oliver will operate the business and receive a guaranteed payment of $50,000. Oliver's share of the income this year is $20,000. How much of the $70,000 will be subject to SE tax for Oliver?

$0. Limited partners are not subject to SE tax.

$20,000. Only the income portion of the $70,000 is subject to SE tax.

$50,000. Only the guaranteed payment is subject to SE tax. As a limited partner, the income would not be subject to SE tax.

$70,000. Both the guaranteed payment and Oliver's share of income are subject to SE tax.