Reasonable Compensation for S Corps

For two decades, the IRS has been preparing an assault on reasonable compensation for S corps. Their arsenal is now fully locked and loaded with everything from commonsense tools to obscure memos. We will explore key court cases, IRS guidelines, preparer penalties, and some of the obscure weapons the IRS has put in place. We will debunk common myths on how reasonable compensation should be calculated and replace it with facts and methodologies that the IRS relies on.

Learning Objectives:

• Determine the basic advantages of distributions v. salary/wages
• Assess the consequences of an IRS re-characterization of distributions
• Review reasonable compensation in the courts
• Discuss the IRS guidelines for determining reasonable compensation
• Determine when reasonable compensation applies to your client
• Explain advanced scenarios
• Review tips from the pros and IRS red flags
• Review why reasonable compensation has become a priority for the SB/SE division of the IRS
• Identify options for determining reasonable compensation