Wednesday, June 6, 2012

CPA did not take a reasonable salary

Appeals upheld a circuit court ruling that s corp dividend distributions were additional wages subject to social security and Medicare taxes for a CPA that brought home $24k in wages and $200k+ in dividends. The IRS determined that a reasonable salary would have been $91k per year. This case provides some insight that should be heeded by many taxpayers. In this instance, the CPA worked full time and was the primary revenue producer in the firm.

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