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IRS recalculation of tax for unreasonable compensation
Michael is the President and sole shareholder of Silver, Inc. a regular corporation. The corporation reported taxable income of $1,200,000, after deducting Michael's $1,000,000 salary. If the IRS disallows $600,000 of the salary as unreasonable compensation, the corporation's regular income tax will change by an:
A. $204,000 increaseB. $175,000 increaseC. $175,000 decreaseD. $204,000 decrease
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