Reasonable Compensation Analysis
46 INSIGHTS SPRING 2012 Compensation Analysis for C Corporations and S CorporationsJohn C. RamirezIncome Tax Compensation InsightsThe reasonableness of shareholder/employee Compensation is often a highly controversial issue in the context of federal income taxation. This is because what is considered Reasonable Compensation by the shareholder/employee taxpayer is often considered unreasonable by the Internal Revenue Service ( Service ). According to Internal Revenue Code Section 162, in order to be deductible for federal income tax purposes, executive Compensation must be (1) Reasonable in amount and (2) based on services actually rendered.
46 INSIGHTS • SPRING 2012 www.willamette.com Reasonable Compensation Analysis . for C Corporations and S Corporations. John C. Ramirez. Income Tax Compensation Insights. The reasonableness of shareholder/employee compensation is often a highly controversial
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