Reasonable Compensation Do's and Don'ts with Case Studies 1 Credit
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Mar 12, 2024 | 02:30 PM
ET
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.
Reasonable compensation stands as a critical and often audited facet of S-corporation taxation. It's an area that frequently draws the attention of the IRS due to its potential for abuse. Contrary to common misconceptions in the tax industry, adhering to simplistic formulas like "pay yourself 60% of the profit as a salary and 40% as a distribution" lacks a factual basis and doesn't align with IRS standards. The essence of reasonable compensation transcends fixed percentages tied to profit. Indeed, audits and court cases have occasionally resulted in compensation figures considerably lower than the aforementioned 60%.
This CE Tax Course addresses the nuances of reasonable compensation—what it truly entails, how to accurately calculate it, and the strategies for effectively defending it against IRS inquiries. Our journey is enriched by a thorough examination of relevant court cases, providing valuable insights into the criteria and considerations that both the IRS and the courts employ when evaluating the reasonableness of compensation decisions.
Join this CPE webinar it empowers you with the knowledge and insights essential for not only ensuring adherence to tax regulations but also strategically optimizing your tax advantages.
Looking to fulfill your Enrolled Agent (EA) Continuing Education (CE) requirements? MY-CPE online Enrolled Agent CE courses are the best for you. Earn EA CE Credits while enhancing your domain knowledge and expertise in diverse tax regulations and practices. Our courses are designed to provide you with the latest updates and deep insights to keep you ahead in your field. With flexible scheduling and a user-friendly platform, MY-CPE offers you a greater convenient and interactive learning experience. Join MY-CPE today and take the next step in advancing your career as an Enrolled Agent.
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Jason Dinesen (EA, LPA) is a tax nerd, entrepreneur, tax expert and a well known presenter of continuing education courses. He has an impeccable acumen for tax subjects, by virtue of which, he is known to create very well researched course materials helping individuals and businesses with accounting, bookkeeping, tax preparation, and business advisory in various industries.
Known for his sharp tax interpretations, he is one of the quickest to bring the analysis of the latest tax updates and IRS guidance to the professional community. Jason has coached over 200,000 accounting, tax, and HR professionals on various topics of accounting, individual taxation, corporate taxation, professional ethics and much more.
He has presented over dozens of webinars on Form 1099 (MISC & R); marriage in the tax code; tax updates; the new Form W-4, payroll updates, filing status, tax credit and other issues relating to the modern-day household setting.
Moreover, Jason is known to be producing every other webinar/course a little different and updated from the previous one. No wonder, he is a top ranked presenter whose webinars and self-study course materials are very well received by the audience.
He also teaches 2 classes at Simpson College, Individual Income Tax and Business Analytics.
Jason was born and raised in Iowa and has a degree in corporate communications from Simpson College in Indianola. He has a big family that includes his wife, two sons, 5 cats and 3 dogs. Jason holds season tickets to University of Iowa football, and enjoys using his chainsaw. Topmost item in his 2022 bucket list is to learn how to properly ‘nose & taste’ whisky.
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To maintain compliance, you must adhere to the guidelines set by NASBA and other regulatory bodies, which include attending the full duration of the webinar, participating in interactive elements, and completing any post-webinar evaluations or assessments.
After successfully attending a live webinar and fulfilling all participation requirements, you can access and download your completion certificates from your account dashboard on our platform. These certificates are recognized by NASBA, IRS, CFP Board, HRCI, SHRM, Payroll Org, FP Canada, and 25+ other regulatory bodies for compliance and reporting purposes.
We issue instant credit certificates, ensuring they are valid for presentation to governing bodies. Typically, we report IRS, CTEC, CFP, IDFP, IWI, VBOA Ethics credits within 7 days – the fastest in the industry.
HK
I really enjoyed this CPE. The presenter was engaging & I enjoyed the examples he gave. It was also provided in a manner in which you can be a layman (not just a tax expert) and still understand the concept. His powerpoint presentation also listed pertinent points so was a really good summary. One negative was that the 1st review question did not list a correct answer. Should have listed 3121 as an option, but listed 3131 instead.
DK
Your presentation highlighted the key considerations in the IRS law, dispelled some of the myths about reasonable compensation "rules of thumb," and introduced some relevant court cases supporting your presentation's key takeaways.
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