Draws By an Owner Employee from a Closely Held Business
Friday, August 10, 2018
IRS loves to attack payments from closely held businesses to owners, particularly owner employees. The story is as old as the hills, but lately it plays out with some unexpected twists and turns. Lessons learned from recent developments provide meaningful guidance as to how to structure to achieve optimal tax treatment of such draws.
**Please Note: If you need credit reported to the IRS for this IRS approved program, please download the IRS CE request form on the Course Materials Tab and submit to firstname.lastname@example.org.
*To empower the participant to understand each context within which draws by owner employees from their closely held businesses are taxed and how to structure such payments for best tax results
* How the rules for owner draws from C corps, S corps, partnerships, LLCs and sole proprietorships differ by context
* Trends in reasonable compensation for C corps, S corps and partnerships
* IRS' recent attack on "reasonable rents" (how do you figure a "reasonable rent" anyway?)
* Structuring a reasonably low salary from an S corp
* Structuring a reasonably low guaranteed payment from a partnership (can it even be done?)
* Recent case instructing how a loan to an S corp can be repaid (by the S corp) (even when the repayment pays the shareholder's personal expenses)
* How other taxpayers fail big on the loan repayment argument
* IRS' recent constructive dividend frenzy in Tax Court
* How C corps may not be as bad as you think
* How S corps are faring better in the courts than partnerships currently (in avoiding employment tax) and what to do about it
* Proper structure of loans and "capital to loan" ratios to keep it clean