Strong Corporation is owned by a group of 20 shareholders. During the current year, Strong Corporation pays $ in salary and bonuses to Stedman, its president and controlling shareholder. The IRS audits Strong's tax return a determines that reasonable compensation for Stedman would be $125,000. Strong Corporation agrees to the adju
a) What effect does the disallowance of part of the deduction for Stedman's salary and bonuses have on Strong Corporation and Stedman?
b) What tax savings could have been obtained by Strong Corporation and Stedman if an agreement had been in that required Stedman to repay Strong Corporation any amounts determined by the IRS to be unreasonable?

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The Answer of Strong Corporation is owned by a group of 20 shareholders. During the current year, Strong Corporation pays $ in salary and bonuses to Stedman, its president and controlling shareholder. The IRS audits Strong's tax return a determines that reasonable compensation for Stedman would be $125,000. Strong Corporation agrees to the adju
a) What effect does the disallowance of part of the deduction for Stedman's salary and bonuses have on Strong Corporation and Stedman?
b) What tax savings could have been obtained by Strong Corporation and Stedman if an agreement had been in that required Stedman to repay Strong Corporation any amounts determined by the IRS to be unreasonable?

Strong Corporation Is Owned by a Group of 20 Shareholders