Shareholders salary from S Corp

[cred65]

There was a discussion several months ago about fair compensation and what was appropriate. Can anyone guide me to that link. Give it a BUMP!!!

[kcjenkins]

That thread was entitled S Corp Salaries. If you do a search for "Scorp Salaries" you will find it.

[Tere]

That thread was entitled S Corp Salaries. If you do a search for "Scorp Salaries" you will find it.

Hi kcjenkins... long time.

[kcjenkins]

Hey, Tere, wonderful to see you on here at last. What took you so long? We missed you.

[OldJack]

There was a discussion several months ago about fair compensation and what was appropriate. Can anyone guide me to that link. Give it a BUMP!!!

What is fair comp is always debatable and not something the tax preparer should determine. This is a decision of the employer/employee. That is not to say the tax preparer does not consult with the S-corp on this matter but it should not be the preparers decision. However, upto now the IRS has only taken to tax court those S-corp tax returns with zero compensation. Seems reasonable to minimize such wages.

As to the previous post quoting below, generally I plan to ignore this IRS employee statement as bureaucratic hog wash.

>>the head of Employment Tax from the SB/SE Specialty Programs stated IRS will continue and expand upon federal and state partnerships particularly in the QETP (Questionable Employment Tax Practices) Program. He specifically stated that 1120S salaries and the issue of reasonable compensation would be a target and that tax return preparer’s were exposed to penalty assertions if they prepared returns that reflected a “less-than-market” salary for services rendered by small business owners of Sub S corporations. <<