Question: My Mother has some GIC’s with your business from a number of different banking institutions and trust companies. Can she put beneficiaries in it, or will they need to transfer to her property when she passes? Answer: She can’t put beneficiaries in it as there isn’t a beneficiary option for a Bank or investment company, Trust Company or Credit Union GIC. What she can do is have the GICs in joint names so that they don’t need to be included in probate when she passes away.
91,044 constituted Watson’s income in 2002 and 2003. To buttress this argument, DEWPC repeatedly asserts that there is no statute, regulation, or guideline requiring an company to pay minimal payment. And, by requiring proof of affordable settlement, DEWPC argues, the region court imposed the very least compensation requirement. Than looking to whether payment was realistic Rather, DEWPC contends that the area court must have centered on taxpayer intent when characterizing the payments.
The idea of “reasonable compensation” is generally an issue within the realm of income taxation. See, e.g., Charles Schneider & Co., 500 F.2d at 151. Under I.R.C. § 162(a)(1), a small business may deduct “a reasonable allowance for salaries or other settlement for personal services actually rendered” as ordinary and necessary business expenditures.
Historically, we’ve applied a factors test to look for the reasonableness of payment in the context of a small business expense deduction. See Charles Schneider & Co., 500 F.2d at 151-52 (discussing factors). Although affordable compensation is usually a concern found in the framework of an income taxes deduction, the IRS finds the idea appropriate to FICA taxes instances equally. In Revenue Ruling 74-44, 1974-1 C.B.
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287, an S company distributed dividends to its two sole shareholder-employees but didn’t pay any wages for their services. ” Id. (emphasis added). Notwithstanding Revenue Ruling 74-44, 6 we’ve not experienced the chance to decide whether a reasonableness evaluation is suitable in identifying if certain payments are actually remuneration for employment subject to FICA taxes. Other jurisdictions provide assistance.
In Joseph Radtke, S.C. USA, 712 F. Supp. S company made dividend distributions to its only shareholder-employee but didn’t pay him any salary. Drawing upon Radtke’s reasoning, other courts dealing with similar FICA characterization issues have evaluated the economic element of the deal as opposed to the form chosen by the taxpayer.
See, e.g., Veterinary Surgical Consultants, P.C. Indeed, looking at the substance of a transaction rather than its form is a hallmark basic principle in resolving taxes disputes, see Boulware v. United States, 552 U.S. Treasury Regulations appear to compel in this case, see Treas. And, in light of all the facts and circumstances of the case, scrutinizing compensation because of its reasonableness might guide a court in characterizing obligations for FICA tax purposes. See Joly v. Comm’r, 76 T.C.M.
91,044. Based on the record, the district court did not err clearly. Although we think reasonableness is pertinent to the analysis, DEWPC urges that instead of focusing on reasonableness, the district court should have centered on DEWPC’s intent. Taxpayer objective, like reasonableness, is usually part of the § 162(a)(1) compensation deduction analysis, although less employed commonly.