Tax Summit – Reasonable Compensation

Both S corporations and C corporations must generally pay reasonable compensation to shareholder-employees. This course will discuss the reasonable compensation issue for both entity types using case law as a foundation for determining the proper amount. In addition, the class will focus on reasonable compensation as a tax planning strategy, including impacts on other tax benefits, such as the §199A deduction.

Learning Objectives

• Describe how the reasonable compensation requirement applies to S corporation shareholders.
• Describe how the reasonable compensation requirement applies to C corporation shareholders.
• Apply case law principles to determine appropriate reasonable compensation amounts.
• Calculate how reasonable compensation impacts the tax outcomes of both the corporation and the shareholder.