Legal Question in Tax Law in Florida

What is considered a reasonable salary by the IRS for a LLC claiming S-Corp tax status with a single owner/operator and annual company earnings totaling $20,000?

Asked on 11/14/13, 10:23 pm

1 Answer from Attorneys

John DeLancett Law Offices of John DeLancett, PL.

Wow, that's a tough one due to the low earnings. You didn't indicate whether that was net or gross earnings. Assuming that they were net, the IRS looks at factors such as are you the sole individual generating income for the business? If so, they tend to lean toward a higher salary. There is no official set percentage. Some CPA's recommend 45%, but that is no guarantee. Because of the low amount of earnings, I would lean towards a higher percentage in your case.

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Answered on 11/15/13, 6:29 am

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