When a CEO's salary exceeds $1,000,000, the employee _____ taxed on the entire amount, and the employer ______ allowed a deduction on the entire amount.
A) is; is
B) is; is not
C) is not; is
D) is not; is not

Question

Quizplus · Accepted Answer

If a CEO's salary exceeds $1,000,000, the employee is still taxed on the entire amount, but the employer is not allowed a deduction on the full amount. According to the IRS, an employer can only deduct up to $1 million in compensation for any individual employee, including the CEO. Therefore, the employer cannot deduct any amount exceeding $1 million in compensation, but the employee is still responsible for paying taxes on the entire salary amount.

When a CEO's Salary Exceeds $1,000,000, the Employee _____ Taxed