Question

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.)

Answer

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.