When I first started practice in 1987, the top individual income tax rate was 38.5%, and the top corporate tax rate was 34.6%. At that time, whether shareholder salaries in a closely held corporation included disguised dividends in order to avoid double taxation was a heavily scrutinized item on the tax return. Today, with the top corporate rate at 22% and most dividends satisfying the rules of being "qualified dividends", and having the same rates as capital gains, the issue has become much less contentious. That said, you still may find yourself having a discussion with your client about taking larger salary or dividends.

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The evolution of tax rates and rules surrounding corporate taxation over the years has indeed influe... View the full answer