Tax Memorandum

MEMORANDUM TO: Mr. Kim FROM: Your name DATE: December 6, 2009 RE: taxation Memo #2-Executive Compensation recognise # 1 1.If KimTech would be audited by the IRS for 2007, Mr. Kim would care to know will his payment be deemed mean(a) and what the corporation would need to show that his earnings is presumable. 2.In Elliots case, the court utter that relevant considerations include the perspective held by the employee, duties performed, and hours worked as intimately as the general wideness of the employee to the achievement of the fraternity go out signifi baset insights into the rationality of the remuneration scheme. Comparison of the employees payment with those paid by exchangeable companies for similar services, companys size as predictd by sales, net income or great value, and whether some relationship exists between the taxpaying company and its employee argon taken into account for reasonable determination. Also, assur e of internal unlikeness in a companys treatment of payments to employee whitethorn indicate that the payments to employees may indicate that the payments go beyond reasonable allowance. 3.Based on the Elliots case, Kim compensation is deemed reasonable because he is the sole shareholders and plays a major situation in the company.

The company has a be track of success with her being the chairman and sole shareholder. Kim can provide the evidence that in recent years KimTechs value hass been appreciating at 7% per year. Issue # 2 1. Kim would like KimTechs compensation to be tested using the item-by-ite m investor/return on right approach to eval! uate the reasonableness of the corporations compensation. 2.In Elliots case, A relevant inquiry is whether an inactive, fissiparous investor would be unbidden to compensate the employee as Elliot was compensated. The nature and whole tone of the services should be considered, as well as the fix of those services on the return the investor is seeing on his investment....If you indispensability to get a full essay, order it on our website: OrderCustomPaper.com

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