Vera is the CEO of Brunettes, a publicly held corporation.For the year, she receives a salary of $800,000, a bonus of $400,000, and contributions to her retirement plan of $45,000.The bonus was awarded at the December board meeting based on Vera's threat to accept a better paying job with a competitor.What amount may Brunettes deduct?

Question

Quizplus · Accepted Answer

Brunettes can deduct Vera's salary of $800,000, bonus of $400,000, and retirement contributions of $45,000, totaling $1,245,000. However, under IRS rules, only $1,000,000 of executive compensation is deductible, plus any performance-based compensation. Since the bonus was not performance-based, the deductible amount is $1,045,000.

Vera Is the CEO of Brunettes, a Publicly Held Corporation