Audrey holds an ownership interest in a business entity. She is in the 28% tax bracket. The entity incurs $30,000 of meals and lodging expense for Audrey, which she believes qualify for exclusion treatment as a qualified fringe benefit. Which of the following statements are correct?

a. If the entity is a partnership and Audrey has a 60% interest, the effect of the $30,000 expenditure by the partnership on Audrey’s tax liability is an increase of $5,040

b. The entity is a sole proprietorship, the effect of the $30,000 expenditure by the sole proprietorship on Audrey’s tax liability is $8,400

c. If the entity is a C corporation, the effect of the $30,000 expenditure by the corporation on Audrey’s tax liability is $0

d. Only b & c are correct

e. a, b, & c are correct.

Answer rating: 100% (QA)

D Only b c are correct Because as per Sec 119 the exclusion is ... View the full answer