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Problem:

Carole owns 75% of Pet Foods, Inc. As CEO, Carole must travel extensively and on the company jet. In addition, she also uses the jet to take several personal vacations. Carole reports the value of the personal use of the jet, $140,000, as additional compensation.

Which of the following is true in terms of the corporation?

The corporation includes $140,000 as miscellaneous income.
The $140,000 has no impact on the corporation's income tax.
The corporation takes a deduction of $140,000 for compensation expense.
The corporation takes a deduction of $140,000 for dividend expense

Note: Please show the work not just the answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91164243

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