Tax Blog

Kurtis’ articles about the IRS and taxes

Reasonable compensation for S Corporations

 
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Shareholders of subchapter S corporations are required to take a “reasonable salary” from their S corporations. 

What is reasonable? 

This is a very gray area of tax law and the answer depends entirely on the facts and circumstances of each individual situation.  The important point for you to know is that this requirement does exist and that you must address it.  So be sure to discuss this with your CPA.  If you prepare your own tax return and have questions about this issue, call or email me.  I’m happy to help.