Tax Memorandum

MEMORANDUM TO: Mr. Kim FROM: Your name DATE: December 6, 2009 RE: Tax Memo #2-Executive Compensation make out # 1 1.If KimTech would be audited by the IRS for 2007, Mr. Kim would resembling to know will his requital be deemed mediocre and what the crapper would need to show that his payment is reasonable. 2.In Elliots case, the court stated that relevant considerations include the perspective held by the employee, duties performed, and hours worked as well as the general wideness of the employee to the feat of the fraternity allow for epochal insights into the reasonableness of the remuneration scheme. equation of the employees salary with those stipendiary by exchangeable companies for alike(p) services, smart sets size of it as predictd by sales, force out income or capital time value, and whether near relationship exists between the taxpaying company and its employee are taken into account for reasonable determination. Also, delay of internal inconsistency in a companys treatment of payments to employee may omen that the payments to employees may indicate that the payments go beyond reasonable allowance. 3.Based on the Elliots case, Kim honorarium is deemed reasonable because he is the sole shareholders and plays a study situation in the company.

The company has a proven drop behind of success with her being the president and sole shareholder. Kim can provide the evidence that in juvenile years KimTechs value hass been appreciating at 7% per year. distinguish # 2 1. Kim would like KimTechs compensation to be tested utilise the independent investor/return on right approach to quantify the reasonableness of the corporations compensation. 2.In Elliots case, A relevant motion is whether an inactive, independent investor would be spontaneous to compensate the employee as Elliot was compensated. The character and quality of the services should be considered, as well as the effect of those services on the return the investor is seeing on his investment....If you want to get a full essay, order it on our website: Orderessay

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