Carol and Mike are 50/50 shareholders in Ticket to Ride, an S corporation, and they both work as employees in managing the business. Their net profit last year was $250,000. They would like to split the profits and take them as a distribution, to avoid self-employment tax, but since they work in the corporation, they must first take a "reasonable" salary. Which is NOT a factor in determining Carol’s and Mike’s reasonable compensation?

1- Direction and control of work performed.

2- Duties and responsibilities.

3-Training and experience.

4- What do comparable businesses pay for similar services.

Answer rating: 100% (QA)

Correct option 1 Direction and control of work performed is NOT a factor in d... View the full answer