Archive - August 2013
A Timely Reminder To Pay Reasonable Compensation
Last week, another Tax Court opinion came out slapping down an S corporation shareholder-employee for not taking out reasonable compensation. As in all of these cases, the taxpayer’s motive in Sean McAlary Ltd, Inc. v. Commissioner, T.C. Summ. Op. 2013-62, is pretty obvious: the S corporation’s income after deducting salary expenses is passed through to the shareholder and taxed as ordinary income. However, the amount paid out as salary is subject to payroll taxes, in addition to being taxed as ordinary income at the shareholder level. Where there is only one shareholder, there is...
August 19, 2013 read more
Sun Capital: Trade or Business Armageddon Talk
For various reasons, I have not posted on the blog for a while, but the recent Sun Capital decision and the related discussion in certain high profile publications, ABA meetings and such, caught my attention. I am not going to go into detail facts discussion of the Sun Capital 1st Circuit court decision (Sun Capital Partners III LP et al. v. New England Teamsters & Trucking Industry Pension Fund et al., No. 12-2312 (1st Cir. 2013)) but the gist is as follows.In Sun Capital, the 1st Circuit Court of Appeals reversed and remanded in part a decision of a lower U.S. District Court of...
August 09, 2013 read more