Discuss any problems related to Pink salary arrangement

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Problem - Pink Corporation has several employees. Their names and salaries are listed below.

Judy $470,000

Holly (Judy's daughter) 100,000

Terry (Judy's son) 100,000

John (an unrelated third party) 320,000

Holly and Terry are the only shareholders of Pink Corporation. Judy and John share equally in the management of the company's operations. Holly and Terry are both full-time college students at a university 200 miles away. Pink has substantial E & P and has never distributed a dividend. Discuss any problems related to Pink's salary arrangement.

Reference no: EM132661937

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