Jamal and Tamara Brown are the sole shareholders of Offshore Development, Inc., an S corporation. Last year, Offshore Development employed the Brown's son, Jason, and paid him a $60,000 salary. During a recent IRS audit, the revenue agent discovered that Jason rarely shows up for work and spends most of his time playing tennis. Which of the following statements is true?
a. The IRS can treat the $60,000 payment as a constructive dividend to Jason.
b. The IRS can treat the $60,000 payment as a constructive dividend to Jamal and Tamara.
c. The IRS can disallow Offshore Development’s $60,000 deduction for Jason’s salary.
d. The discovery has no tax consequences to Jamal and Tamara or to their son, Jason.