Ownership compensation – Beware of IRS scrutiny

Description

Abstract: Dealership owners who believe that deciding how much the company’s owners should be paid — in salaries and benefits or stock dividends — is a fairly simple profit-driven decision should think again. Many factors need to be considered when making compensation decisions so that, among other things, they’ll hold up to IRS scrutiny in case of an audit. This article explores several of the most important factors, including possible ramifications for C and S corporations if salaries or dividends are set too high.