By: Steve Parrish

A term that is frequently bandied around in business tax circles is “reasonable compensation”. For owners and entrepreneurs this term may seem unnecessary when talking about their own compensation. Reasonable compensation should be whatever the owner feels he can afford to pay himself, right?

Unfortunately, other parties may have a say in how this term is defined. A major party in interest is the IRS. Compensation paid to an owner/employee is a corporate distribution. And how these distributions are defined affects how they are taxed by the IRS. Read More