Reference no: EM13795299
Details: Real estate company. S corporation. Located in IL.
2013 Gross receipts: 376,450 - net income: 122,600
2014 Gross receipts: 405,200 - net income: 161,700
2015 Gross receipts: 518,200 - net income: 231,450
Guy Man: president, secretary, treasurer, director, and sole shareholder. Manages all aspects of operations. Only person with a broker's license. Works 12 hour days with few off days. Salary set at $24,000 per year for managing company. Married filing jointly. During 2015, Guy transferred $240,000 from the S corp to his personal bank account.
As an expert witness for the IRS, I am tasked with determining the amount of reasonable compensation that is subject to income, employment, and the Medicare net investment income taxes.
Show calculations for Guy and corporation. Use legal sources (irs pubs, tax cases). There are no "correct" answers.
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