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https://www.thebalancesmb.com/what-is-a-reasonable-salary-for-an-s-corporation-officer-397939#:~:text=The%20IRS%20requires%20that%20distributions%20and%20other%20payments,cash%20distributions%2C%20payments%20of%20personal%20expenses%2C%20or%20loans.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=924326
It is important because of the introduction into the corporations legislation of the concept of corporate officers being paid reasonable remuneration. The authors examine a series of court judgments both in Australia and in overseas jurisdictions which have dealt with the question of what constitutes reasonable remuneration.
https://www.thebalancesmb.com/what-is-a-reasonable-salary-for-an-s-corporation-officer-397939
S Corp Officer Wages Must Be Reasonable. The IRS requires that distributions and other payments by an S corporation to a corporate officer …
https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1763004_code178811.pdf?abstractid=924326
Executive remuneration is a topical subject. It is also increasingly important because of the introduction into the Corporations Law of the ANDREW DEr1 INA concept of corporate officers being paid reasonable remuneration. The τιιηΐΜΛβ Γ· IT A DPfC authors examine a series of cases both in Australia and in overseas ItlUMAö C IiAKKId
https://www.semanticscholar.org/paper/What-is-Reasonable-Remuneration-for-Corporate-An-in-Harris-Ramsay/893f2438e4528e4a1a9b6dfc28170d7ce8ef1810
Executive remuneration is a topical subject. It is important because of the introduction into the corporations legislation of the concept of corporate officers being paid reasonable remuneration. The authors examine a series of court judgments both in Australia and in overseas jurisdictions which have dealt with the question of what constitutes reasonable …
https://www.chugh.net/how-to-determine-a-reasonable-salary-for-corporate-owners-and-officers/
Reasonable Salaries for C Corporation Officers. The IRS evaluates an employee’s professional background, and the business’s nature and practices when deciding whether compensation is “reasonable” for C corporations. It considers the following: Employee Information: Duties and the time invested to complete them. Skills and achievements.
https://www.researchgate.net/publication/228192010_What_is_Reasonable_Remuneration_for_Corporate_Officers_An_Empirical_Investigation_into_the_Relationship_between_Pay_and_Performance_in_the_Largest_Australian_Companies
Executive remuneration is a topical subject. It is important because of the introduction into the corporations legislation of the concept of corporate officers being paid reasonable remuneration.
https://letsledger.com/blog/taxes/reasonable-compensation/
The IRS states that officers must receive reasonable compensation, but the rules on what counts as “reasonable” are vague. How do you determine what is reasonable and what is unreasonable compensation for your officer? Fair compensation should align with the Goldilocks principle. You can’t pay too little, you can’t pay excessive amounts.
https://www.picpa.org/articles/cpa-now-blog/cpa-now/2020/12/16/s-corporation-reasonable-salary-explanation
Say your 100% owned S corporation will make $200,000 in profit prior to any W-2 wages paid to you. Normally, you would take $130,000 as W-2 wages and withdraw the rest as nonwage distributions; the $70,000 of remaining profit flows through to you and your taxable income is only $186,000 ($130,000 W-2 plus $56,000 ($70,000 multiplied by 0.8).
https://www.irs.gov/pub/irs-news/fs-08-25.pdf
"Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation." The amount of the compensation will never exceed the amount received by the shareholder either directly or indirectly.
https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-employees-shareholders-and-corporate-officers
Ghosn v. Comm’r, T.C. Memo. 1995-192. Purported “loans” from S corporation to its sole shareholder, officer, and director, were wages for purposes of FICA and FUTA taxes. The loans were unsecured demand notes bearing no interest, loans were made entirely at the discretion of shareholder, and the shareholder regularly performed substantial ...
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