Payments to Corporate Officer Subject to Employment Taxes

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We have posted a number of articles addressing the income and employment tax issue of “reasonable compensation.” However, the focus of many of these posts has been excessive compensation paid by regular corporations. The position of the Internal Revenue Services in these cases has been that the “excess” compensation was really a disguised dividend, which […]

compensation, taxpayer, tax return, GYF, Grossman Yanak & Ford LLP, Pittsburgh, CPAs

Compensation Paid to Sons of Company’s Founder Was “Reasonable”

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In an important recent case on reasonable compensation, H.W. Johnson, Inc., T.C Memo 2016-95 (Tax Ct.), the Tax Court found for the Taxpayer. The Taxpayer, a concrete contracting business, was owned 51% by the founder’s wife and 49% by her two sons. On its tax return, the taxpayer deducted approximately $4 million and $7.3 million […]

Tax Court Case Challenges “Reasonable” Compensation

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In an important recent case on reasonable compensation, the Tax Court found for the taxpayer. As is always the case in such circumstances, review of the case can provide valuable insight as to best practices in dealing with similar matters. A deduction for compensation is allowable under the Internal Revenue Code only if the expense […]