Final answer:
The S corporation cannot deduct most fringe benefits for shareholders.
Step-by-step explanation:
The correct answer is B) False. The S corporation cannot deduct most fringe benefits for shareholders. Only certain fringe benefits are deductible for S corporation shareholders, such as health and accident insurance premiums. These benefits must be provided to all employees and their spouses and dependents. The deductibility of fringe benefits for shareholders also depends on various factors such as the shareholder's ownership percentage and the nature of the benefits.