Explain the double taxation problem

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Reference no: EM13152540

Shareholders in closely held C-corporations often pay themselves large salaries in order to avoid double taxation on corporate income.

a. Briefly explain the double taxation problem and how paying large salaries to owners avoids it.

b. Briefly discuss how the reasonable compensation issue applies to S-corporations.

c. Briefly discuss the IRS s position on reasonable compensation for owner-employees of closely held C-corporations.

Reference no: EM13152540

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