Both S corporations and C corporations must pay reasonable compensation to shareholder employees. This course discusses the reasonable compensation issue for both entity types using case law as a foundation for determining the proper amount. In addition, the class focuses on reasonable compensation as a tax planning strategy, including impacts on other tax benefits, such as the §199A deduction.

Learning Objectives

  • Describe how the reasonable compensation requirement applies to S corporation shareholders.

  • Describe how the reasonable compensation requirement applies to C corporation shareholders.

  • Apply case law principles to determine appropriate reasonable compensation amounts.

  • Calculate how reasonable compensation impacts the tax outcomes of both the corporation and the shareholder.

Education Information

IRS Program Number: NMVBP-T-00210-22-S

Length: 100 minutes plus optional question-and-answer session (no CE)

Prerequisite: None

Advanced Preparation: None

Program Level: Basic

Delivery Method: QAS Self-Study (NASBA) / On-Demand (IRS)

Field of Study: Taxes (NASBA) / Federal Tax Law Topics/Federal Tax Related Matter (IRS)

Credit hours: 2 NASBA CPE / 2 IRS CE

Information can be found quickly by searching key terms in the text/PowerPoint using the built-in search feature.

Course expires one year after purchase.

Instructor: Thomas Gorczynski, EA, CTP, USTCP Click here to learn more about the instructor.

All continuing education credit is provided through Gregory & Associates, Inc. which is doing business as Compass Tax Educators. Click here to learn more about our education policies. 

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