Tax Memo - Executive Compensation

TO: Mr. Kim FROM: DATE: October 10th 2010 RE: Tax Memo #2-Executive payment do it One and Applicable Case Law, Code &type A; Regulations As adept of our esteemed client, we atomic number 18 glad to assist you and we would equivalent to give you ab bulge instruction concerning the current location at your political party. It has come to our attentions that you requested to obtain information ab appear the chief executive officers salary that may be termed as approriate if the IRS audits it. The episode of Elliott v Commissi wizardrs 716 F.2d 1241, 1983 US is the best one to decide on whether the IRS auditing pull up stakes reveal that Mr. Kims compensation is un apt. The court brought out some five factors, to look at in find out whether compensation is reasonable. The first one is that compensation must part with the another(prenominal) similar firms. The role of the employee in the firm should rove no conflict of interest. The condition and the nature o f the company train manageation and fin aloney internal consistency needs attention. These are the factors to use to analyze whether Kims compensation is or is non reasonable. The reason is that the company makes a gross profit of one million dollars of which nine hundred thousand goes to the pocket of Mr. Kim.

The mechanical rifle Divided Rule, Lev 441/447 of 1974, notes that compensation may be considered reasonable if at that place exists a compensatory purpose. From the case, it is clear that as KimTechs CEO, you have met all the criteria and the requirements set in the Elliot case to consider your com pensation reasonable. The company is perform! ing well as a requirement since there is a growth of 7 percent. The lineup of directors who comprises of the CEO, CFO and the ill-doing president agrees. The CEO also has some other duties that he must attend to which makes him multi task at the company. You need to be compensated for that and all these factors make your compensation reasonable. bother ii and Applicable Case Law, Code & Regulations The topic under(a) concern here is that even...If you want to get a freehand essay, order it on our website: OrderCustomPaper.com

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