Archive 2015-86: IRS Job Aid on Reasonable Compensation




Archive 2015-86: New IRS Job Aid on How the IRS Determines Reasonable Compensation

**Webinar 86 Live Broadcast Date: May 7, 2015T**

presented by
Michael Gregory, ASA, CVA and Qualified Mediator in MN

VPS StraightTalk Webinar Series: New IRS Job Aid on How the IRS Determines Reasonable Compensation Presented by the Original IRS Issue Champion

For the first time ever, you will learn about the IRS internal Job Aid entitled “Reasonable Compensation Job Aid for IRS Valuation Professionals” dated October 29, 2014. This is presented by Michael Gregory, the original IRS issue champion of this initiative. This recently obtained internal IRS document presents background on this topic from the perspective of the IRS. This document was written to help IRS professionals that are reviewing reasonable compensation issues. Major elements of this document are presented and Michael Gregory offers his insights as to what this might mean for business valuers reviewing reasonable compensation issues while providing valuations for federal tax purposes.

Webinar Outline:

Summary of the Job Aid

  • Background and History of the Job Aid
  • Prepared for IRS Valuation Professionals
  • Purpose, Background and Case Coordination
  • – Suggested readings: James Hitchner, Melanie McCoskey, Shannon Pratt, Ron Seigneur and Kevin Yeanoplos, BNA Portfolio
  • – Cautions
  • Identifying a Reasonable Compensation Issue
  • – Sources – paid for by IRS
  • – Free sources
  • Developing Reasonable Compensation Issues
  • – Factual development – five information document requests
  • – Financial analysis – example in Appendix D

  • – Market – example in Appendix E
  • – Income – example in Appendix F
  • – Cost approach
  • – Reconciliation
  • Taxpayer Arguments for Reasonable Compensation Issues
  • – Prior years’ under compensation
  • – Multiple jobs
  • – Independent investor test
  • – Employee personally guarantees debt
  • – Key person
  • Consideration of Penalties
  • Focusing Specifically on Not-For-Profits
  • – Note in Appendix I nine-step process
  • – Discussion on loans for not-for-profit and for-profit entities
  • – Key fringe benefits identified
  • – Compensation and benefits issue practice group (IPG) subject matter experts (SME)

Some Further Commentary on the Job Aid by the Original IRS Issue Champion

  • Overview of the Job Aid – well done and worthwhile
  • Discuss key points with recommendations you can use

Learning Objectives:

Participants on this webinar will:

  • Learn the most current thinking by the IRS when the IRS reviews reasonable compensation
  • Learn what the IRS deems the most appropriate data sources and their limitations regarding reasonable compensation
  • Understand how the IRS thinks the issue of reasonable compensation should be approached
  • Understand what the IRS thinks of various court cases associated with different aspects of the issue
  • Gain insight from the presenter on how you may want to respond going forward


Information on CPE credits, refund policies, and complaint resolution can be found at

Included in this downloadable archived webinar package:

  • Audio/Video file
  • Webinar transcript
  • Original Webinar handouts

The archived webinar package is an Adobe Presenter PDF file that allows you to view the video of the webinar with the synced audio so that you see the presentation just as it was presented “live.” The Presenter format also allows for easy navigation through the webinar so you can quickly go to a specific section in the presentation. The handout materials are included in the file. To view the Webinar Presenter file, you must have Adobe Reader software version 9 or higher. You can download the free current version of Adobe Reader at

Additional information

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