Archived

Archived

how-an-s-corp-can-lose-money-and-be-required-to-pay-reasonable-compensation-lg

How an S Corp can Lose Money AND be Required to Pay Reasonable Compensation

This scenario is possible because Reasonable Compensation is not tied to Profit or Loss but to Distributions.   The IRS guidelines for Reasonable Compensation state: The amount of reasonable compensation will never exceed the amount received by the shareholder either directly or indirectly.  It does not mention profit or loss at all but instead talks about ‘amounts …

How an S Corp can Lose Money AND be Required to Pay Reasonable Compensation Read More »

the-relationship-between-business-valuation-and-reasonable-compensation-lg

The Relationship Between Business Valuation and Reasonable Compensation

A common question in public practice is, “how much is my business worth?” This question comes up for a variety of reasons. It could be a business merger, sale of the business, divorce, death or even idle curiosity. There are a lot of different factors that go into a business valuation. It is an oversimplification, …

The Relationship Between Business Valuation and Reasonable Compensation Read More »

three-methods-of-determining-reasonable-compensation-part-i-the-cost-approach-lg

Three Methods of Determining Reasonable Compensation Part I: The Cost Approach

There are three generally accepted methods for determining reasonable compensation for the owner of a closely-held business. It is important to match each method with the business’s size and business owner’s job duties. The Cost approach, aka many hats, approach: Generally works best for small businesses where the owner wears multiple hats. The Market approach, aka …

Three Methods of Determining Reasonable Compensation Part I: The Cost Approach Read More »

three-methods-of-determining-reasonable-compensation-part-ii-the-market-approach-lg

Three Methods of Determining Reasonable Compensation Part II: The Market Approach

There are three generally accepted methods for determining Reasonable Compensation for the owner of a closely-held business. It is important to match each method with the business’s size and business owner’s job duties. The Cost approach, aka many hats, approach: Generally works best for small businesses where the owner wears multiple hats. The Market approach, …

Three Methods of Determining Reasonable Compensation Part II: The Market Approach Read More »

three-methods-of-determining-reasonable-compensation-part-iii-the-income-approach-lg

Three Methods of Determining Reasonable Compensation Part III: The Income Approach

There are three generally accepted methods for determining Reasonable Compensation for the owner of a closely-held business. It is important to match each method with the business’s size and the business owner’s job duties. The Cost approach, aka many hats, approach: Generally works best for small businesses where the owner wears multiple hats. The Market …

Three Methods of Determining Reasonable Compensation Part III: The Income Approach Read More »

no-tax-court-for-reasonable-compensation-re-characterization-lg

No Tax Court for Reasonable Compensation Re-Characterization

In a recent memorandum to its agents and examiners, the IRS lays out steps to keep Reasonable Compensation challenges out of Tax Court.  Great, you say, nobody wants to go to court! Not so fast. The option of filing a petition in Tax Court provides taxpayers with time and leverage. By following the steps in this memo, …

No Tax Court for Reasonable Compensation Re-Characterization Read More »

4-free-tools-that-make-reasonable-compensation-compliance-a-breeze-lg

4 (free) Tools that make Reasonable Compensation Compliance a breeze

Watching the leaves in free fall inspired us at RCReports to put together four free resources for you. All of these tools (and more) are free for RCReports account holders. If Reasonable Compensation has been a tough subject to bring up with your clients, offering these free tools may help you rake in the data you need …

4 (free) Tools that make Reasonable Compensation Compliance a breeze Read More »

wiley-l-barron-cpa-ltd-v-commissioner-of-internal-revenue-lg

Wiley L. Barron, CPA, LTD. v. Commissioner of Internal Revenue

T.C. Summary Opinion 2001-10 February 7, 2001 Having become very familiar with the court case, Wiley Barron became easy to talk about, particularly when it came to Sub-Chapter S Corporations and reasonable compensation. Mr. Barron’s office was located in Pine Bluff, Arkansas. His S Corporation, of which he owned 100%, was formed in 1990 and …

Wiley L. Barron, CPA, LTD. v. Commissioner of Internal Revenue Read More »

        Submit a Ticket

        Scroll to Top