Profit v. Distribution
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Profit v. Distribution and its effect on Reasonable Compensation
- September 1, 2018
- Posted by: RCR Admin Team
- Category: Blog
By Paul S. Hamann & Jack Salewski, CPA, CGMA
How does profitability factor into a Reasonable Compensation calculation? This is one of the most frequent questions we receive. The short answer is: “Very little.”
That being said profit now plays a role on the shareholders 1040 with the passage of the TCJA. How section 199A and the QBI affects your clients 1040 will vary significantly, because, as has been pointed out many times since the passage of the TCJA, section 199A is incredibly complex and the IRS has just released guidance on the issue. Stayed tuned for more on the QBI in upcoming articles.
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Profit v. Distribution and its effect on Reasonable Compensation Part II
- June 1, 2016
- Posted by: RCR Admin Team
- Category: Archived
By Paul S. Hamann & Jack Salewski, CPA, CGMA
Last month we walked through three basic examples of how distributions affect Reasonable Compensation. If you missed it or need a refresher click on this link. This month we will dive into two more complex examples: The first explores Reasonable Compensation and look back periods. The second explores how basis and loans affect Reasonable Compensation.
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Profit v. Distribution and its effect on Reasonable Compensation Part I
- May 1, 2016
- Posted by: RCR Admin Team
- Category: Archived
By Paul S. Hamann & Jack Salewski, CPA, CGMA
How does profitability factor into a Reasonable Compensation calculation? That is one of the most frequent questions we receive. The short answer is: “Very little.” To help you understand why we’ll describe a few scenarios below and next month. First, a few guidelines:
