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When 199A and Reasonable Compensation Collide – (WEA)

When 199A and Reasonable Compensation Collide
IRS Program # X9QQU-T-00817-21-S
CE: 2
Materials
When 199A and Reasonable Compensation Collide
What does the qualified business deduction (QBI - IRC 199A) have to do with reasonable compensation at the low end for small S corporations? More than meets the eye.

We will focus on Code Section 199A specifically how it relates to the sweet spot in garnering the maximum qualified business deduction of 20%. This number is impacted by salary and profit. However, we will also delve into whether this code section is a diamond to be mined and if this now has created now new statutory guidance for the EA to assists their clients in the area of reasonable compensation..

Learning Objectives
  • We will review the basics of the ratios between salary and net profit.
  • We will calculate the sweet spot to receive the max benefit under the Code.
  • Upon review of the QBI “sweet spot” we will see what it reveals statutorily when determining salary for the small S Corp owner.
  • We will cover the cases that we have always “hung our hats upon” such as Radtke v. US, and our dear friend Watson (David E Watson v. US).
  • We will discuss the possibility of the crumbling of the “Ostrovsky Doctrine” in Watson v Commissioner, 668 F.3d 1008 (2012) where a CPA comrad was decided he did not pay himself reasonable compensation and was taken to the proverbial “Gorky Park” by the IRS general engineer Igor Ostrovsky.
  • We will stand or sit in amazement that an IRC Section that may speak to reasonable compensation for the very first time through Code Section 199A.
Presenters

R. Kevin Cross, MST, EA, CPA
Kevin is a licensed CPA, EA, author, financial counselor, and fraud sleuth who uses his wit, wisdom and unique insight to lecture on fraud, mentor, advise and teach on the ethical use of money.

He practice is a boutique style tax prep firm and enjoys weighing in on a good fraud, assisting taxpayers with IRS controversies, offering outsourced CFO services, and volunteering.
Continuing Education
This course qualifies for IRS Continuing Education Hours. NAEA reports IRS CE on a monthly basis. If you have not received your CE Hours in your IRS PTIN Account by the end of the month after receiving the certificate, please contact NAEA at education@naea.org. IRS Requirements for live webinars require at least 50 minute per hour attendance and answering 3 out of the 4 polling questions. For on-demand, you must watch the full video, answer the knowledge check, and pass the assessment with a score of 70% or above. No partial CE is offered. 

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