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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The deductible amount for reasonable compensation is limited to a "reasonable amount." In this scenario, the CFO's compensation package of $1,400,000 is considered reasonable based on industry standards and her level of responsibilities. Therefore, FIFO can deduct the full amount of $1,000,000 ($900,000 basic salary + $100,000 bonus) as reasonable compensation, resulting in taxable income of $400,000 for the CFO.

FIFO Corporation,a Public-Traded Corporation,pays Its CFO a Basic Salary of $900,000