Search Help


Enter one of more keywords to search. Use quotes for “exact phrase.” Note that '*' and '?' wildcards are supported.

When your search results appear, you can refine your search further: Sort for only results in which all search terms appear AND/OR sort by chronological order.

Article Date:
July 2016


Word Count:
910

 

 

Tax Court Puts Personal Service Corporations on Notice for Bonuses


Sometimes it seems the IRS is just out to get you.

 

If you operate as an S corporation, the IRS knows that your strategy is to lower your salary and bonuses so that both you and your corporation pay less in FICA and Medicare taxes.

 

If you operate as a personal service C corporation, your strategy is to increase your W-2 income so you can zero out the corporate income that’s subject to the flat 35 percent tax rate on all personal service corporate income.

 

A recent court ruling puts personal service corporations that use the zeroing-out strategy on notice for using this practice.

 

The Brinks case shows us just how badly your corporation can get slammed for failing to make its zeroing-out bonuses hold up to the IRS and the court. ... Log in to view full article.

Log in to view full article
Already a subscriber?
 
Email Address

 
Password

Log In

You'll be able to read the full article and get instant access to the last few issues of the Tax Reduction Letter

Not yet a subscriber?
 
with a money-back guarantee



 

SS