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Complimentary Guide
The 9 IRS Factors for S-Corp Reasonable Compensation (FS-2008-25) and the IRS Job Aid
Nine factors, two Tax Court cases, and the examiner training document, in plain English for tax pros who set owner salaries.

IRS Fact Sheet FS-2008-25 lists nine factors the IRS weighs when it looks at an S-corp owner's salary. Examiners and Tax Court judges still work from that list, and the internal Reasonable Compensation Job Aid tells examiners how to turn it into a number. This guide walks through both documents.

What you get in 14 pages:

  • Each of the nine factors, what it actually asks for, and what documentation answers it

  • How the Tax Court applied the factors in McAlary and Watson, including where the salary figures came from

  • What the IRS Job Aid says about the Cost, Market and Income approaches, and which one examiners are trained to prefer

  • Why formula-based salaries (60/40, a percentage of revenue) count against the taxpayer

  • A frequently-asked-questions section covering the Job Aid's legal status and the factors that matter most in practice

  • A sources list with every IRS, Treasury and court citation

Written for CPAs, EAs and tax advisors who set and document owner compensation. Direct download, no form.

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