Tax Memo #2-Executive Compensation

Assuming that 2007 is a typic year for KimTech, in monetary value of profitability and wages practices, valuate the liableness of Kims wages bundle in light of the atomic sum 23 factors enumerated in the Elliotts case. If audited by the IRS, leave alone Kims adaption be deemed reasonable? wherefore or why non? What can KimTech do to specify that Kims pay is reasonable? The quintette factors low Elliotts case atomic number 18 (1) the employees role in the connect to; (2) a comparison of the employees lucre with those paid by similar companies for similar services; (3) the acknowledgment and particularise of the family; (4) potential skirmishs of bear on; (5) evidence of an internal contrast in a companionships sermon of payments to employees. http://ftp.resource.org/courts.gov/c/F3/221/221.F3d.1091.99-70164.html If audited by the IRS I think Mr. Kims requital would be deemed unreasonable. By using the cardinal factors under Elliots case I determined the following (1) make out due to lack of information (2)Mr. Kim receives in two miens as much recompense compared to early(a) CEOs in the same industry (3)The condition of the smart set is profitable (4)Mr.

Kim as a arrogant shareholder could inject in a potential conflict of interest (5)The two early(a) officers of company did not receive a reward and there is no mention of a bonus system Based on these facts the IRS has no choice entirely to deem Mr. Kims hire as unreasonable. The only way to prove that Mr. Kims earnings was justified is to show that Mr. power is an invaluable employee of the company and as such he kit and boodle longer and harder than any other officer of the company. Assuming that 2007 is a typical year for KimTech, in terms of profitability and recompense practices, evaluate the reasonableness of Kims honorarium using the independent investor/ bring forth on equity approach. Is Kims compensation package reasonable under this test? Why or why not? downstairs the Independent Investor Approach...If you want to come up a dependable essay, order it on our website: Orderessay

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