Question: 11. One way to avoid the double tax on C corporation earnings is to: pay deductible bonuses to shareholders who are employees. pay deductible interest
11. One way to avoid the double tax on C corporation earnings is to:
- pay deductible bonuses to shareholders who are employees.
- pay deductible interest to shareholders who are also creditors.
- pay deductible rent to shareholders who are also lessors.
- never pay dividends.
- all of the above.
12. Fs share of income from various sources is as follows for the current year:
Fs Share of
Entitys Fs Share of
Source Net Income Distributions
ABC Partnership after deducting partners salary $ 8,000 $ 9,000
Fs salary (guaranteed payment) from ABC Partnership n/a 30,000
XYZ Corporation, a C corporation 80,000 40,000
EDF Corporation, an S corporation 40,000 10,000
Fs A.G.I. (ignoring the deduction for onehalf of any selfemployment tax) is how much?
a. $89,000
- $158,000
c. $118,000
d. $128,000
13. Which of the following is not true of the standard deduction?
a. It is the amount that itemized deductions must be less than before a taxpayer itemizes.
b. It is increased for elderly taxpayers.
c. It is $25,100 for married persons filing jointly for 2021.
- It is not the same amount for all taxpayers.
____ 14. X, a single taxpayer, has A.G.I. of $60,000 and the following itemized deductions for 2021, before percentage limitations:
Medical expenses (unreimbursed) $5,550
State income taxes 4,400
State and local real property taxes 1,300
Residence interest 3,500
Investment interest 300
(net investment income = $775)
Charitable contributions 1,600
Miscellaneous itemized deductions 1,150
Xs allowable itemized deductions are
a. $12,150.
b. $11,100.
c. $17,800.
- $16,650.
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