Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108 Page 109 Page 110 Page 111 Page 112 Page 113 Page 114 Page 115 Page 116 Page 117 Page 118 Page 119 Page 120 Page 121 Page 122 Page 123 Page 124 Page 125 Page 126 Page 127 Page 128sponsored by BUSINESS TIP In the ceramic tile industry there are many small business- es which may be Subchapter S Corporations, since there are many appealing tax benefits while still providing liability pro- tection to the shareholders. If you’re a shareholder-employee of an S Corporation, you more than likely considered the tax advan- tages of this entity choice. But those very same tax advantages also tend to draw IRS scrutiny. And the agency has made clear that its interest in S Corporations – including possible audits – will continue. The IRS focuses on determining whether the salary of the shareholders is unreasonably low. The tactics listed below will help protect your company from this IRS examination. What’s the problem? The IRS pays particular atten- tion to S Corporations because, as you well know, shareholder- employees of these organizations aren’t subject to self-employment taxes on their respective shares of the company’s income. This dif- fers from, say, general partners in a partnership. To better manage payroll taxes, many S Corporations minimize shareholder-employee salaries (which are subject to payroll taxes) and compensate them mostly via “dividend” distributions. If this holds true for you, the IRS may take a close look at your salary to determine whether it’s “unrea- sonably” low. The agency views overly-minimized salaries as an improper means of avoiding pay- roll taxes. If its case is strong enough, the IRS could recharacterize a por- tion of distributions paid to you and other shareholder-employees as wages and bill the employ- er and/or employee for unpaid IRS continues to enforce "reasonable" sharehold-employee salaries 30 TileLetter | January 2017