- NY Credits : 2.0
- TX Credits : 2.0
- IRS Enrolled Agent Credits : Federal Tax/Tax Related Matters - 2.0
The IRS has dedicated Valuation Analysts assigned specifically to determine if taxpayers are avoiding paying taxes by manipulating the reporting of compensation expense. Entities with elevated risk of IRS concern include family businesses, closely held businesses, subchapter S corporations, and foreign corporations. Transactions that will have a similar affect of concern include acquisitions, divestitures, adjustments to prior year compensation, and different types of loans. When the IRS raises reasonable compensation concerns and challenges the taxpayer, the burden of proof falls on the taxpayer to support and justify the compensation expense. It is critical that the taxpayer understands and recognizes the red flags that bring the attention of the IRS to compensation issues so that they can avoid an unnecessary IRS audit and be prepared if the IRS begins procedures to scrutinize the tax return.
This course is most beneficial to professionals new to unreasonable compensation concerns who may be at the staff or entry level in organization but also for a seasoned professional with limited exposure to IRS concerns related to deductions for compensation.
Upon successful completion of this course, the user should be able to:
define reasonable for the purpose of reasonable compensation,
recognize the definition and characteristics of compensation in different forms,
recognize the application of the job aid for the IRS Valuation Analyst,
identify risk factors that could flag a compensation audit by the IRS,
determine policies and procedures to properly report compensation of officers and other employees,
determine which steps the IRS takes to identify reasonable compensation issues,
identify statements of defense for reasonable compensation issues raised by the IRS, and
recognize the potential penalties for filing tax returns with unjustified compensation.