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Reasonable Compensation Do's And Don'ts With Case Studies

Reasonable Compensation CPE Course

1 Credit

$10

Subject Area

Taxes

Webinar Qualifies For

1 CPE credit of Taxes for all CPAs

1 CE credit of Federal Tax for Enrolled Agents ( IRS Approved : GEHNZ ) (Approval No. GEHNZ-T-00635-21-S)

1 CE credit of Federal Tax Subjects for California Tax Professionals (CTEC Approved - 6273) (Approval No. 6273-CE-0602)

1 CE credit of Annual Filing Season program (AFSP)( IRS Approved : GEHNZ )

1 CPD credit (Verifiable) for Certified Valuation Analyst (CVA)

1 CE credit of Federal Tax for Oregon Tax Preparers (Approval No. GEHNZ-T-00635-21-S)

1 CE credit of Federal Tax for Maryland Tax Preparers (Approval No. GEHNZ-T-00635-21-S)

1 General Educational credit for Tax Professionals / Bookkeepers / Accountants

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Before starting this self study program, please go through the instructional document.

Overview

  • Reasonable Compensation Myths
    7 mins
  • Reasonable Compensation
    12 mins
  • Sean McAlary LTD vs. Commissioner
    16 mins
  • Reasonable Comp Case
    30 mins
  • QBI Deduction
    49 mins

Course Description

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.

What is reasonable compensation?

Ensuring that an S corporation pays reasonable compensation to a shareholder-employee in exchange for services provided by the shareholder-employee is important in protecting both from assessments of tax, penalties, and interest. S corporation shareholders must include in income their pro-rata share of the S corporation’s earnings for the year. A shareholder-employee is not subject to self-employment taxes on a deemed or actual distribution of S corporation income, and the corporation does not pay any employment-related taxes on the distribution (Sec. 1373; Rev. Rul. 59-221). Conversely, a shareholder-employee and the S corporation are subject to employment taxes on compensation payment for a shareholder-employee’s services. As a result, S corporations often try to disguise compensation payments for services as income distributions. Ultimately, the determination of whether payments to a shareholder represent compensation for services or constitute a distribution of profits is essentially a factual determination.

Major topics covered in this online CE webinar:

  • What IRS looks for while auditing
  • Major myths relating to the setting of reasonable compensation
  • How much to pay the shareholder to avoid an IRS audit
  • What court cases have said regarding reasonable compensation?


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Learning Objectives

  • Explain the concept of reasonable compensation
  • Explain methods -- and myths -- relating to determining reasonable compensation
  • Identify resources for determining reasonable compensation
  • Understand court cases and IRS guidance relating to reasonable compensation.

Who Should Attend?

  • Annual Filing Season Program
  • Bookkeepers & Accountants & Tax Preparers
  • California Registered Tax Professional
  • Certified Public Accountant
  • CPA (Industry)
  • CPA - Large Firm
  • CPA - Small Firm
  • Enrolled Agent
  • Maryland Tax Preparers
  • Oregon Tax Preparers
  • Tax Accountant (Industry)
  • Tax Attorney
  • Tax Director (Industry)
  • Tax Firm
  • Tax Managers
  • Tax Practitioners
  • Tax Preparer
  • Tax Professionals
  • Tax Pros
  • Young CPA

Testimonial

4.8

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