What is a reasonable salary?

This question is one that any entity may be faced with, but for S corporations, it is becoming a hot topic. In 2009, a U.S. Government Accountability Office report noted that the combined 2003 and 2004 underreported shareholder compensation was $24.6 billion for corporations with fewer than three shareholders being responsible for nearly all of that. How is that relevant to the IRS?

Sounds strange, but it’s just a way of saying you have created a connection with a State. Those business connections can create taxable issues and those connections are easier to create than you may think. In a recent study, 95% of companies underestimated their nexus footprint.