Reasonable Compensation

By: Martin M. Shenkman, CPA, MBA, JD

If salary, wages, perquisites or other remuneration is paid from a business or trust, the aggregate compensation will generally have to be "reasonable" in comparison to the services provided and other relevant factors to be respected by the IRS. In the context of business valuations and divorce the "reasonable compensation" of a spouse, owner or other key person is often estimated and any compensation above that amount adjusted in determining earnings (normalized earnings) for purposes of evaluating the business' worth, etc.

Our Consumer Webcasts and Blogs

Subscribe to our email list to receive information on consumer webcasts and blogs, for practical legal information in simple English, delivered to your inbox. For more professional driven information, please visit Shenkman Law to subscribe.

Ad Space