Reference no: EM133650428

Think about a company's tax plan and how this impacts decision-making when considering taxation and consider what you have learned about S corporations:

1. Summarize the limitations that apply to the amount of loss pass-through an S corporation shareholder can deduct. Consider the following in your response:

Losses exceeding this limitation

Stock transfers from a shareholder

Limitations of loss and the calculation of basis are accounted for per the current tax regulations

2. Describe the three hurdles a taxpayer must pass if they want to deduct a loss from their share in an S corporation. Determine the hurdle you think provides the greatest challenge for a taxpayer. Consider the following in your response:

Limitation rules and their impact on the deductibility of losses from an S corporation

3. Describe how an S corporation determines a reasonable salary for its shareholder or employee. Consider the following in your response:

Factors that must be considered

4. Provide a potential tax planning strategy related to a shareholder or employee compensation to reduce the overall tax liability of the shareholder. Consider the following in your response:

Tax savings for shareholders under various classifications of compensation.