Which of the following is not a true statement?
shareholder-employees who own more than 2 percent of the S corporation, the S corporation gets a tax deduction, but the otherwise qualifying fringe benefits are taxable to the more-than-2-percent shareholder-employees.
S corporation owners have a tax incentive to pay themselves a low salary. For shareholder-employees who own 2 percent or less of the entity, the S corporation gets a tax deduction for qualifying fringe benefits, and the benefits are nontaxable to the employees. An S corporation shareholder’s allocable share of ordinary business income (loss) is not classified as self-employment income for tax purposes. None of the choices are false.
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