Between 2010 and 2013, a flurry of court cases and IRS enforcement brought the issue of what is reasonable compensation for a shareholder-employee of an S Corp to the forefront.
The playing field is shifting much more dramatically than meets the eye for owners of pass-through entities.
S-corporation reasonable compensation is one of the most misunderstood concepts in tax law. And that’s saying something, considering how mind-numbing U.S. tax laws are. The law says the corporation must pay a “reasonable” salary to the owner if the owner provides services to the business. The definition of “reasonable” will vary depending on the type of business and the type of services provided by the owner.
Wholly different income tax implications are in play. How to plan?
Register for our 2-hour CPE event and find out.