What is the net impact of this audit

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Question - Gerry is the sole shareholder and president of Garmon Corporation. He also owns the office building that serves as the corporation's headquarters. Last year, Garmon paid Gerry $250,000 for the use of the building. Garmon's MTR was 21% and Gerry's was 37%. The revenue agent who audited Garmon's return has concluded that the fair rental value of the office building was $200,000. What is the net impact of this audit conclusion on Gerry and Garmon's combined income tax liability?

$10,500 net increase

$8,500 net decrease

$2,000 net increase

$2,000 net decrease

None of the above.

Reference no: EM132556393

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