In this day and age, do you really think the IRS challenges the compensation of shareholder/employees?© BrainMass Inc. brainmass.com October 1, 2020, 9:52 pm ad1c9bdddf
In short: absolutely.
C Corporations shareholder/employees are essentially taxed twice-once when the profit is put into retained earnings and again when those retained earnings are distributed later in the form of dividends, bonuses, etc. Because regular salaries are deductible from the corporation's earnings, many firms overpay shareholder employees ...
The solution details an excessive compensation challenge by the IRS.