When the basis in an S shareholder’s loan to the S corporation has been reduced by passthrough losses, repayment of the loan may be a taxable event.
Economic benefits from an S corporation’s payment of a premium on a life insurance policy were not includible in the shareholder/employee’s income.
All companies should maintain supporting documentation for payments.
Two recent Tax Court opinions focusing on reasonable compensation for S corporation shareholder-employees provide important takeaways for owners and practitioners by addressing common issues surrounding distributions and loan repayments in the context of reasonable compensation.
The Eighth Circuit affirmed a lower court's decision that an S corporation shareholder’s $24,000 salary was not reasonable compensation.
This article looks at recent court decisions regarding S corporation shareholder reasonable compensation that provide helpful guidance on how an adviser can determine what is reasonable compensation.
A recent district court decision highlights the employment tax risks to S corporations that are found to have paid unreasonably low compensation to shareholder-employees while making distributions to the same individuals.
This item discusses how reporting a higher wage can actually maximize long-term profits for the owner-employee of an S corporation.