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Article Date:
March 2012

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S Corporation Pays Zero Salary to Owner



Will the IRS permit an S corporation to pay its owner-employee zero salary during its start-up phase when it earns little or no income or incurs a loss? (R.E.V., Waynesboro, Va.)




Yes, but . . .


The IRS recognizes the S corporation zero-salary strategy as one of its hottest of hot buttons.


You can understand why. S corporations can serve as a payroll tax–saving device, because employee salary is subject to payroll taxes but the S corporation distribution ... Log in to view full article.

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