Low wages, high distribution

[ILLMAS]

Reviewed new clients 2019 1120S and they had a very low pay compared to the distribution.

15,000 vs 75,000

I understand they already paid taxes on distribution, but do you see anything wrong with this ratio?  There are probably worst ratios but this probably the worst I have seen and I did mention to the client thier salary is not reasonable for the type of work they do.

[Lee B]

Facts & circumstances. What did they do and how many hours did they work. It's possible it's totally OK

[ILLMAS]

I see your point, unfortunately they worked all year and their ideal salary for working for someone else would be $120-140K.  They provide maintenance for industrial equipment and 15K doesn’t seem reasonable for how much they charge their customers per hour or job.

[Medlin Software, Dennis]

2 hours ago, ILLMAS said:

do you see anything wrong with this ratio? 

Conceivably good if the TP can document the hours actually worked were low enough and the work would have a similar profit if someone else was doing the same job.

On another point, if this is the only income source, the TP could be harming themselves and their family by having such a low SSA income, depending on their need to factor SS benefits if any injury, death, retirement need, etc.

[Lee B]

Your post implies that you didn't prepare the 1120S, if so all you can do is advise them of the problem and what needs to be done.