S Corporation Shareholder-Employee Compensation: The Reasonable Compensation Standards

This course will provide tax advisers and other professionals with a comprehensive examination of the rules governing compensation of S corporation officers and shareholders, focusing on determining, documenting, and supporting reasonable compensation to avoid or withstand IRS scrutiny.

Course Description:

Perhaps the most significant advantage of the S corporation is the ability of shareholders to pass through some of the corporation’s net income to its shareholders without incurring two levels of income tax or employment tax on the amounts.

However, the IRC requires S corporations to pay “reasonable compensation” to shareholders who provide services to the business. The Code does not set a bright-line rule but instead uses a facts-and-circumstances test to determine how much is reasonable compensation.

The IRS is aggressively pursuing S corp shareholder-employee compensation arrangements in circumstances where the Service deems the shareholders to be avoiding employment tax through unreasonably low compensation.

The Service’s track record in tax court has been, by and large, successful. Generally, when the IRS has challenged compensation schemes, distribution payments have been reclassified as salary, resulting in the S corps and the shareholder-employees paying additional employment taxes plus interest and penalties.

Listen as our experienced panel provides guidance on how to document an S corporation shareholder-employee compensation plan, remedy plans that could be subject to examination, and defend against IRS challenges.

Hosted by Strafford

Register Here

When: Wednesday February 02, 2022:

  • 10:00 AM Pacific
  • 11:00 AM Mountain
  • 12:00 PM Central
  • 01:00 PM Eastern

Cost: $186.00
CPE Credits: 2.0 hours
Subject Area: Taxes
Course Level: Basic
Instructional Method: Group Internet Based
Prerequisites: None
Advanced Preparation: None

Who Should Attend: CPA practitioners who advise Shareholder-Employees of S Corps on the issue of Reasonable Compensation who are interested in learning about current IRS guidelines, and solutions for advising their clients on the issue of Reasonable Compensation.

Learning Objectives:

The panel will review these and other vital issues:

  • What types of businesses and compensation arrangements are most likely to attract IRS challenge?
  • Standards for structuring and defending reasonable compensation plans
  • Identify options for determining fair compensation
  • Assess the consequences of an IRS recharacterization of distributions

Instructor:

Paul Hamann is an expert on determining Reasonable Compensation for closely-held business owners. He has educated more than 30,000 tax advisors and valuators on the topic of Reasonable Compensation and has been published in numerous state CPA society journals.

Paul, along with other experts in their own fields founded RCReports in 2010. RCReports cloud software determines reasonable compensation for Closely-Held Business Owners and is used by CPA’s, EA’s, Tax Advisors, Valuators, Forensic Accountants and Attorneys when they need to determine a Reasonable Compensation figure for a client.

When Paul isn’t in the office he enjoys spending time with his wife and two chocolate labs, hiking Colorado’s back country or paddling its scenic lakes and rivers.

Jason Watson, CPA Mr. Watson advises small business owners in creating a map for the future. His focus is on S corporations, self-employment taxes, health insurance issues and retirement planning. He is a published author on tax issues for S corporations and LLCs, Taxpayer’s Comprehensive Guide to LLCs and S Corps.

Testimonials:

Giulia Dozzi (CrawfordEllenbogen, LLC)

This is one of the best CPE courses I have ever attended. I practice in multiple areas – estate and gift, trust, pass-through entity, and individual, and while there are many complex situations to discuss with clients, this is one that it seems the industry decided to ignore. For a time, the audit rate seemed to support the blinders approach, however personally, I don’t agree with this approach. This course not only educated on the issues for the client, but also for the preparer, and provided suggestions as to how to approach the clients who want to close the conversation before it opens. I could not recommend this course enough.


David Baker (David L. Baker, CPA)

“I’ve worked as a CPA for 40 years, this was the clearest presentation of the reasonable comp issue I have ever heard. Well done.”


Candace Stevens (Number Cruncher LLC)

Before the webinar, I new Reasonable Compensation was important. After the webinar, I now know that it isn’t just important but VERY important. I now know I need to reach out to all of my corporate owners and educate them on the importance of doing a Reasonable Compensation study completed. I also now that if they will not comply, I will need to fire them. No client is worth a $5,000 penalty. Thank you for sharing this information


Kelly Confair (Howard Howard & Hodges)

This webinar is so far beyond informative. I have learned so much in the changes with the changes in the tax laws and how to present to my clients why Reasonable compensation is required and some of the problems it can cause with the IRS, as opposed to just stating the information. I’ll be taking the information back to my firm to further explore the need of having justifications and reasoning for each S-Corporation.


Jace Wilkins (Sweeney Wilkins and Associates)

It is hard to find good CPE. Most of the time, I walk away satisfied if about 25% of what was said was relevant. This course was almost all relevant to me and my clients and it was very helpful. Since it was a free course, I was worried that it was just a disguised ad for a product. There was a product advertised but the bulk of the presentation was relevant regardless of whether you got the product or not.


Richard Swofford (Ronald L. Tharp P.C.)

“GREAT GREAT GREAT. I have taught around the world to businesses and academia. This course could not be organized better! It is the way I would do it if I was doing the course preparations. He loaded us up with attachments and really helpful items.”


Boise Ashbrook (The Tax Office LLC)

“This was by far the best presented and most educational webinar I have ever been in. Thank you for much newly gained knowledge.”



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