No paraphrased folklore. These guides quote the statute, the regulation, and the case law directly, with pinpoint citations you can verify yourself.
The statute, regulation, and case law behind the S corp reasonable compensation requirement: IRC 162(a)(1), Treas. Reg. 1.162-7(b)(3), Rev. Rul. 74-44, and the factor tests courts apply.
A CPA paid himself $24,000 while taking six figures in distributions. The Eighth Circuit affirmed recharacterization at $91,044. What Watson actually held, and what it did not.
The 50/50 split, the 60/40 split, and the wage-base cap appear in no statute, regulation, or case. What the authorities actually require, and what courts do when owners rely on ratios.
The IRS published its examiners' reasonable compensation playbook: three valuation approaches, the independent investor test, and factor frameworks traced to Mayson and Owensby.
The regulation measures reasonableness at the date compensation is set, not the date it is questioned. The record to build now: duties, hours, comparability data, and factor evidence.