Question: Phil recently received a permit to open a medical waste incineration
Phil recently received a permit to open a medical-waste incineration center in Newark, New Jersey. He has been working on the project for some time with his colleague Karen. Now that they have received a permit, they are going to establish an S corporation to handle operating the new business, with Phil as the CEO and Karen as the COO. They feel comfortable that the new business venture is going to make large profits, because other similar businesses have done well (the key, as it turns out, is working with federal, state, and local agencies to obtain the permit). Phil wants to limit the amount of employment taxes he pays on his compensation from the S corporation and is thus considering paying himself a very low salary and taking the bulk of his profits from the business as a distribution from the S corporation. Prepare a memo that explains how reasonable compensation can be established for Phil; include techniques from both the circuit in which he resides and any other circuit for addressing the issue of reasonable compensation.
Answer to relevant QuestionsErnie and Julie Paltrow purchased a 57-acre property in Temecula, California in 2011. They began developing approximately 40 acres of the property for vineyards and incurred substantial costs to prepare the land for the ...Coldbear Inc., a California corporation, recently entered into two new contracts with clients in Georgia and Utah. In order to service those clients, Coldbear will hire a couple of additional employees (based in California) ...State University invites Dr. Byko, a Russian citizen, to become a member of the faculty for a three-year period to work on a large grant the university obtained from the National Aeronautics and Space Administration (NASA). ...A group of Russian tourists spent a week in Las Vegas. Kolzak, one of the tourists, was very lucky at the roulette table and won $ 50,000. Is Kolzak subject to U. S. income tax, and is the casino required to withhold taxes ...As mentioned previously, Anh really enjoyed the lifestyle in southern California. After living in student housing her first year, she immediately moved off campus into a nearby apartment. Over time, Anh started to grow quite ...
Post your question