The IRS agent who audited the Form 1120 filed by Alano Inc. concluded that $300,000 of the salary that Alano paid to its CEO and sole shareholder was a constructive dividend. As a result:
A) The CEO/shareholder's taxable income increases by $300,000.
B) The CEO/shareholder must repay $300,000 of his salary to Alano.
C) Alano must distribute an additional $300,000 cash to the CEO/shareholder.
D) Alano's taxable income increases by $300,000.

Question

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The Answer of The IRS agent who audited the Form 1120 filed by Alano Inc. concluded that $300,000 of the salary that Alano paid to its CEO and sole shareholder was a constructive dividend. As a result:
A) The CEO/shareholder's taxable income increases by $300,000.
B) The CEO/shareholder must repay $300,000 of his salary to Alano.
C) Alano must distribute an additional $300,000 cash to the CEO/shareholder.
D) Alano's taxable income increases by $300,000.

The IRS Agent Who Audited the Form 1120 Filed by Alano