Reasonable Compensation  

The IRS has dedicated Valuation Analysts assigned specifically to determine if taxpayers are avoiding paying taxes by manipulating the reporting of compensation expense. Entities with elevated risk of IRS concern include family businesses, closely held businesses, subchapter S corporations, and foreign corporations. Transactions that will have a similar affect of concern include acquisitions, divestitures, adjustments to prior year compensation, and different types of loans. When the IRS raises reasonable compensation concerns and challenges the taxpayer, the burden of proof falls on the taxpayer to support and justify the compensation expense. It is critical that the taxpayer understands and recognizes the red flags that bring the attention of the IRS to compensation issues so that they can avoid an unnecessary IRS audit and be prepared if the IRS begins procedures to scrutinize the tax return.

This course is most beneficial to professionals new to unreasonable compensation concerns who may be at the staff or entry level in an organization but also for an experienced professional with limited exposure to IRS issues related to deductions for compensation.