Response to the following:
1. Corporate Taxable Income
A corporation pays its Chief Executive Office (CEO) $2 million during the year. Discuss the tax implications of the CEO's salary both to the corporation and the CEO.
2. Bad Debts
A corporation properly uses the reserve method to deduct bad debts on the financial statements (as it is the only method allowed under Generally Accepted Accounting Principles). Does an accrual basis corporation use this method to deduct bad debts the corporate income tax return? Explain.