Course#: 12

Category: Tax Issues and Planning

Field of Study: Taxes

Audience: HR Managers, HR Generalists

Level of Difficulty: Advanced

Delivery Method: Self-Study

Prerequisites: Some college level courses with moderate algebraic training

Advanced Preparation: None

Overview:
This taxation course reviews the U.S. Internal Revenue Service (IRS) federal income tax standards for reasonable compensation of stockholder-employees in closely held corporations. Reasonable compensation challenges result from the IRS suspicion that stockholder-employees have paid themselves so as to improperly reduce their taxes through underpayment or overpayment of compensation, depending on the type of corporation. This course looks at IRS reasonable compensation standards as applied to the following: a sole proprietorship, partnership, small business, limited liability company, subchapter S corporation, C corporation, and tax-exempt nonprofit organization. We teach reasonable-compensation analyses based upon executive compensation salary surveys, proxies, and IRS form 990’s.

Learning Objectives:

• Explain the IRS definition of reasonable compensation
  
• Analyze the effect of incorporation choices on tax structures for executive compensation packages
  
• Understand the causes of compensation variance and the arguments that may be made for extraordinary compensation
  
• Describe the company and personal federal income tax deductions that may be taken for stockholder required employee benefits and fringe benefits
  
• Create a maximum reasonable compensation estimate by job, industry, organization size, and location
  
• Explain business valuation strategies for owner-managers who wish to sell their small businesses, establish employee stock option plans, or gift their stock to their children

Credit and Professional Continuing Education Information:

• Compensation Committee Certification (CCC)
• PHR/GPHR/SPHR (SHRM)
• CPE Registry Self-Study (CPAs)
• Job and Compensation Analyst (JCA)
• CPE QAS Self-Study (CPAs)
• CCP/CBP/GRP (WorldatWork)
• Authors

*The Course Credit Map displays credit types offered by location and corresponding lists of eligible courses.