FIFO Corporation, a public- traded corporation, pays its CFO a basic salary of $900,000 and a $500,000 bonus awarded for exceptional service. Her compensation package is considered reasonable compensation when compared to other similar corporations and her level of responsibilities. FIFO can deduct

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Under IRS rules, public companies can deduct up to $1,000,000 of compensation paid to certain executives, including the CFO. The bonus and salary together exceed this limit, so FIFO can only deduct $1,000,000.

FIFO Corporation, a Public- Traded Corporation, Pays Its CFO a Basic