Question

ncorrect Question 17 0/0.35 pts Star Corp., an accrual-method C corporation, incurred the following expenses in 2020 (all of which are ordinary and neccessary unless the facts indicate otherwise): Office rent: $50,000 CEO compensation: $1,500,000 Salary paid to janitor: $250,000 Business meals: $60,000 (100% of the amount paid) Client entertainment: $100,000 (100% of the amount paid) Traffic fines: $5,000 Advertising: $70,000 Taxes & licenses (state, local & payroll): $30,000 Life insurance policy on CEO - premiums: $12,000 Average office rents in the area run $50,000-$55,000/year for similar office space. Star Corp.s janitor is the CEO's sister. Reasonable salary for a janitor with similar experience, job description and work hours is $20,000/year. The CEO often runs late to important meetings, and he has a tendency to speed (and get speeding tickets) on his way. Star Corp. pays the speeding tickets. Star Corp. is the beneficiary on the life insurance policy.

Answer 1

Star Corp.'s deductible business expenses for the year are:-
		$
	Office rent	50,000
	CEO Compensation	15,00,000
	Salary paid to Janitor	20,000	As reasonable salary for a janitor is $20000/year
	Business meals	60,000
	Client entertainment	1,00,000
	Traffic fines	-	This would be a personal expense
	Advertising	70,000
	Taxes & Licenses	30,000
	Life insurance policy on CEO-Premium	12,000
	Total	18,42,000