An S-corp salary exam opens with a letter asking how the officer compensation figure on the return was arrived at. If the answer is thin, the examiner builds a figure of their own and bills the payroll tax on the difference, with interest and the accuracy-related penalty dated back to the original due date. This guide walks through the whole sequence.

What you get in 9 pages:

• How returns get flagged: the scoring that catches a blank or low officer-compensation line against large distributions

• What a reclassification actually costs: both halves of FICA, the 20% §6662 penalty, and interest, with a worked example

• The cases that set the pattern: Radtke, Watson and Clary Hood, and where each salary figure came from

• The preparer's exposure under §6694 when no analysis exists

• The one document that changes the outcome: a written, dated analysis showing which published wage figures produced the salary

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

Written for CPAs, EAs and tax advisors who sign S-corp returns. Direct download, no form.