Brussels Sprouts V. Reasonable Compensation
There is a long list of reasons why (Top 10 List) an S Corp owner should determine their reasonable compensation, but the only method that consistently works time and time again is to put your foot down and tell your S Corp clients it’s for their own good and require them to do it. Tom Ochsenschlager, former head of tax for the American Institute of CPAs, says pay and payroll tax issues are a frequent source of friction with clients:“Sometimes you have to take them to the woodshed and say, ‘You need to report more income as pay for personal services.” – Wall Street Journal – Read More
Preparer Penalties & Reasonable Compensation
Because the majority of S Corp owners do not understand Reasonable Compensation, it places the burden of educating them on their Tax Advisor. The IRS requires tax preparers to be proactive in asking for the right information necessary to prepare tax returns, even if it means the preparer will need to spend more time with the client during the preparation process. Asking the appropriate questions will keep the preparer out of the penalty box. AICPA Tax Preparers Beware
Apology to Brussels Sprout Fans
Our apologies to those of you who like Brussels sprouts, as well as those of you who like to research and document your Reasonable Compensation figure.
Brussels sprouts were originally introduced to the Americas when French settlers brought them to Louisiana. Brussels sprouts contain sulforaphane, a chemical believed to have potent anticancer properties. The majority of Brussels sprouts are grown in northern California and Washington State.
Median wages for some of the hard working folks who bring us Brussels sprouts in San Mateo County, California:
Farm Supervisor– Occupation #3866 Median pay – $31.15/hour
Farm Tractor Operator– Occupation #3911 Median pay – $10.80/hour
Crop Picker – Occupation #3923 Median pay – $11.95/hour
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