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Court Cases

David E. Watson, P.C, v. United States of America 2010 & Appeal 2012
The Watson case re-affirmed the IRS right to re-characterize some distributions as wages if they believe the Reasonable Compensation figure was not reasonable for the services provided.

Sean McAlary Ltd, Inc. v. Commissioner of Internal Revenue 2013
A great case to look at and learn some of the methods the IRS uses to determine a Reasonable Compensation Figure and how the courts interpret some of their own guidelines to determine a Reasonable Compensation figure.

Glass Blocks Unlimited v. Commissioner of Internal Revenue 2013
This case reminds us to treat shareholder loans properly or they may be classified as distributions and be subject to Reasonable Compensation.