IRC §162(a)(1) · Davis v. US · FS 2008-25

S-Corp Reasonable Comp

Split salary and distributions the way an auditor would accept. Save SE tax without picking a fight.

Total business net income (before owner comp)

Industry

Owner hours per week

Market salary for your role (BLS comp survey)

Audit-defensible split

Recommended W-2 salary

Remaining distribution

Payroll tax (SS+Medicare, both sides)

SE-tax saved vs sole prop

Audit-risk score (0=low, 100=high)

Have our office set your W-2 wage

2024: Social Security wage base $168,600 at 12.4% (both sides). Medicare 2.9% no cap, plus 0.9% additional over $200K single/$250K MFJ. Reasonable comp standard from §162(a)(1) and IRS Fact Sheet 2008-25; defended in Davis v. United States, 8th Cir. 1990. Estimate only. 689-331-5723 · info@zerofusstaxes.com