Impact on Reasonable Compensation for S Corp Shareholder: Employees
Author: Greg White
| CPE Credit: |
2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC |
Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2028 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card
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 course 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 your clients need to be aware of.
Publication Date: October 2025
Designed For
CPAs, EAs, and other tax professionals and tax staff who have responsibility for tax planning for S corporations and filing Forms 1120S.
Topics Covered
- Overview — Reasonable Compensation
- Major Issue — Recharacterization
- Substance over Form
- Officers Who Provide Minimal Services
- Hands-on Case Study
- Form 1120-E
- Social Security - Looking Down the Road
- Computation (Simplified)
- Net Cash Flow After Payroll Taxes and QBID
- QBI Deduction
- Definition of "High Income" (2025)
- 2026 Section 199A QBID
Learning Objectives
- Recognize how to 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
- Identify the last step in computing the cost of lost Social Security benefits
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
