Impact on Reasonable Compensation for S Corp Shareholder: Employees
Author: Greg White
| CPE Credit: |
2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC |
What Is the Optimal Balance of Pay vs. Dividends for S Corp Employee-Shareholders?
Join experienced tax practitioner and instructor Greg White, CPA, as he presents a broad overview of the reasonable compensation rules, including up-to-the-minute changes. This two-hour CPE webinar will include coverage of how the Tax Cuts and Jobs Act (TCJA) affects decision-making in grey areas, and how to determine the optimum amount of compensation (within a reasonable range) for S corporation shareholder-employees. The new tax law presents opportunities and pitfalls that you clients need to be aware of.
Greg will compare S corporations vs. LLCs under the TCJA to help you optimize entity choices and tax planning. You will learn when do S corporations provide greater qualifying business income deductions (20% passthrough deduction) – and when they provide less.
Publication Date: January 2021
Designed For
CPAs, EAs, and other tax professionals and tax staff who have responsibility for filing Forms 1120S.
Topics Covered
- Definition of reasonable compensation
- Case Law — Reasonable Compensation
- Lessons Learned S Corps and Payroll Taxes
- Benefits and "Reasonable Compensation"
- Background on the QBID
- Planning ideas
- Taking into account the cost of lower payroll taxes
- Lower social security benefits
- What is the "cost" of paying less in payroll taxes
Learning Objectives
- Recognize how determine "reasonable compensation" for S corporation shareholders
- Identify and apply the reasonable compensation rules in specific settings
- Describe how to maximize S corporation shareholders' 20% passthrough deduction
- Identify and apply a formula to determine the optimum amount of wages to maximize the 20% passthrough deduction
- Recognize how to adjust reasonable compensation (within a reasonable range) to maximize the 20% passthrough deduction
- Differentiate court cases and how they apply to your clients
- Identify the steps in calculating social security benefits
- Recognize the current tax rates
- Describe specified service businesses
Level
Intermediate
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
Participants should have experience in federal income taxation issues including preparation of Forms 1120S.
Advance Preparation
None
