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S
strongsilence
Level 10
May 28, 2025
Question

S corp compensation

  • May 28, 2025
  • 1 reply
  • 5 views

Hooty Hoo

In ITA I have selected the S Corp compensation strategy and ITA lowered the 2025 compensation from 2024 by 30K.  It didn't disclose the methodology for the new salary.  I'd like to know more about its choice of salary.

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1 reply

S
strongsilenceAuthor
Level 10
May 29, 2025

Update:  Tech support does not know.  There is a video on this topic, but it doesn't shed light on my question.

George4Tacks
George4Tacks
Level 15
May 29, 2025

It is likely using one of many possible "how to compute reasonable compensation" formulae. Have you played with various modifications on your own to see what the effect is? 

Answers are easy. Questions are hard!
    S
    strongsilenceAuthor
    Level 10
    May 30, 2025

    Thanks.

    I haven't tried other compensation amounts yet.  Agree that is likely a formula. If so, I think that is a no-no as compensation must have a purpose other than tax reasons.

    The taxpayer is high wealth, a physician, deducts losses on ranching operations, lots of debt.  He may be in a risk for audit.  I suppose one of the paid research services would offer us a little more confidence.

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