When is no compensation considered reasonable compensation?
When an officer of a business is an officer in name only. That is one of the key takeaways of Davis v. United States, one of the landmark cases in the canon of compensation law.
This is the 25 anniversary of Davis v. United States, and Paul Hamann and Jack Salewski recently penned a new analysis of the decision. While the case is held out as the only reasonable compensation case the IRS has lost, the authors argue that a nuanced analysis produces a more balanced view of the decision.
Then they offer some practical advice on putting the lessons of Davis to work in assessing your firm’s – or your client’s – compensation.
You can read their analysis on RC Reports’ website: https://rcreports.com/resources/reasonable-compensation-blog/did-the-irs-really-lose-lessons-from-the-davis-case