Discussion:S-Corp Reasonable Compensation
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| Revision as of 01:01, 27 April 2006 Bean (Talk | contribs) (agree with Warre) ← Previous diff |
Revision as of 15:07, 27 April 2006 Foxttron (Talk | contribs) (Rule of Thumbs,) Next diff → |
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| {{ForumReplyPost|UserID=Bean|Date=27 April 2006|Text=agree with Warren.}} | {{ForumReplyPost|UserID=Bean|Date=27 April 2006|Text=agree with Warren.}} | ||
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| + | {{ForumReplyPost|UserID=Foxttron|Date=27 April 2006|Text=Rule of Thumbs, if the salary is over the FICA limit, in very few cases the IRS will try to modify it. After all, this is not a C corp. }} | ||
Revision as of 15:07, 27 April 2006
Discussion Forum Index --> Tax Questions --> S-Corp Reasonable Compensation
| 26 April 2006 | |
| Trying calculate reasonable salary for S-corp shareholder to avoid IRS recalculation. Client is an 80% shareholder of a retail furniture store. For teh past two years, W-2 wages were $275,000 and k-1 distributions were 2,750,000. Will the IRS consider this a reasonable salary if subject to an audit?MrSolomon 15:06, 26 April 2006 (CDT) | |
| 26 April 2006 | |
| I think that the main thing that you have to ask yourself is "could he hire someone to do what he does for $275,000?" If the answer to that question is yes, then it is reasonable compensation. The IRS might try to make the K-1 distributions an issue but, in my opinion, the amount of those distributions are not related to the topic of fair compensation. | |
| 27 April 2006 | |
| Rule of Thumbs, if the salary is over the FICA limit, in very few cases the IRS will try to modify it. After all, this is not a C corp. | |
