True or False – Explain your answers 1. Cash compensation is not as important in closely-held corpor

True or False – Explain your answers

1. Cash compensation is not as important in closely-held corporations then it is in other forms of corporate organization.

2. Use of cash compensation avoids complex IRS rules, unlike other forms of compensation.

3. The IRS does not usually question reasonableness of compensation if salaries are not particularly high.

4. Excessive payments for salaries or compensation become taxable as ordinary income to the recipient.

5. Reimbursement agreements are an effective way to avoid the IRSAc€?cs reasonableness of compensation issue.

6. Tax rules governing corporate deductions for parachute payments apply equally to all types of corporations.

7. No employer tax deduction is allowed on an excess parachute payment.

8. Most payments that would violate securities laws are, by definition, parachute payments.

9. A payment agreement made with an executive within a year of corporate ownership change is considered a parachute payment, no rebuttal is allowed.

10. Parachute rules do not apply to payments for a SIMPLE IRA.