Wanda is the Chief Executive Officer of Pink corporation, a publicly traded, calendar year corporation.For the current year, Wanda's compensation package consists of: How much of Wanda's compensation is deductible by Pink Corporation?

Question

Wanda is the Chief Executive Officer of Pink corporation, a publicly traded, calendar year corporation.For the current year, Wanda's compensation package consists of:  How much of Wanda's compensation is deductible by Pink Corporation?

Quizplus · Accepted Answer

The amount of Wanda's compensation that is deductible by Pink Corporation is limited to $1,000,000, but this limit does not apply to performance-based compensation. Since $250,000 of Wanda's compensation is performance-based, it is not subject to the $1,000,000 limit and therefore deductible by Pink Corporation. This leaves $1,000,000 + $3,000,000 = $4,000,000 of Wanda's compensation subject to the limit, making her compensation package deductible up to a total of $1,250,000 (the $1,000,000 limit + the $250,000 of performance-based compensation).

Wanda Is the Chief Executive Officer of Pink Corporation, a Publicly