What Is the Optimal Balance of Pay vs. Dividends for S Corp Employee-Shareholders?
Join experienced tax practitioner and instructor Greg White, CPA, as he presents a broad overview of the reasonable compensation rules, including up-to-the-minute changes. This two-hour CPE webinar will include coverage of how the Tax Cuts and Jobs Act (TCJA) affects decision-making in grey areas, and how to determine the optimum amount of compensation (within a reasonable range) for S corporation shareholder-employees. The new tax law presents opportunities and pitfalls that you clients need to be aware of.
Greg will compare S corporations vs. LLCs under the TCJA to help you optimize entity choices and tax planning. You will learn when do S corporations provide greater qualifying business income deductions (20% passthrough deduction) – and when they provide less.
Publication Date: January 2021
Designed For
CPAs, EAs, and other tax professionals and tax staff who have responsibility for filing Forms 1120S.
Topics Covered
- Definition of reasonable compensation
- Case Law — Reasonable Compensation
- Lessons Learned S Corps and Payroll Taxes
- Benefits and "Reasonable Compensation"
- Background on the QBID
- Planning ideas
- Taking into account the cost of lower payroll taxes
- Lower social security benefits
- What is the "cost" of paying less in payroll taxes
Learning Objectives
- Recognize how determine "reasonable compensation" for S corporation shareholders
- Identify and apply the reasonable compensation rules in specific settings
- Describe how to maximize S corporation shareholders' 20% passthrough deduction
- Identify and apply a formula to determine the optimum amount of wages to maximize the 20% passthrough deduction
- Recognize how to adjust reasonable compensation (within a reasonable range) to maximize the 20% passthrough deduction
- Differentiate court cases and how they apply to your clients
- Identify the steps in calculating social security benefits
- Recognize the current tax rates
- Describe specified service businesses
Level
Intermediate
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
Participants should have experience in federal income taxation issues including preparation of Forms 1120S.
Advance Preparation
None
Instructor
Greg White
Greg White, CPA, taught for 14 years as an adjunct professor for Golden Gate University. He’s admitted to practice before the United States Tax Court. He is a founder and shareholder, in WGN PS in Seattle, WA. He has been named a Top 50 IRS Representation Practitioner in the U.S. by CPA Magazine and has taught for a number of professional organizations. Greg enjoys the technical side of tax, but also likes to have fun in class.