Arthur is the sole shareholder of Purple, Inc. Purple's taxable income before the payment of Arthur's salary is $300,000. Based on this information, Arthur has the corporation pay him a salary of $200,000 and a bonus of $100,000. A reasonable salary and bonus would be $175,000. Which of the following is correct? a. The taxable income of Purple, Inc., is
Arthur is the sole shareholder of Purple, Inc. Purple's taxable income before the payment of Arthur's salary is $300,000. Based on this information, Arthur has the corporation pay him a salary of $200,000 and a bonus of $100,000. A reasonable salary and bonus would be $175,000. Which of the following is correct?
a. The taxable income of Purple, Inc., is $0 ($300,000 - $300,000 salary and bonus).
b. The taxable income of Purple, Inc., is $100,000 ($300,000 - $200,000).
c. Arthur has salary and bonus income of $300,000.
d. Arthur has salary and bonus income of $175,000 and dividend income of $125,000.
e. None of the above.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
a. The taxable income of Purple, Inc., is $0 ($300,000 - $300,000 salary and bonus).
b. The taxable income of Purple, Inc., is $100,000 ($300,000 - $200,000).
c. Arthur has salary and bonus income of $300,000.
d. Arthur has salary and bonus income of $175,000 and dividend income of $125,000.
e. None of the above.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For 
Canadian Income Taxation Planning And Decision Making
17th Edition 2014-2015 Version
Authors: Joan Kitunen, William Buckwold
ISBN: 9781259094330