Tax Memo #2-Executive Compensation

assume that 2007 is a typical year for KimTech, in basis of profitableness and wages practices, evaluate the liableness of Kims wages bundle in light of the atomic number 23 factors enumerated in the Elliotts case. If audited by the IRS, leave alone Kims allowance be deemed sensitive? why or why non? What can KimTech do to assign that Kims pay is reasonable? The louvre factors under Elliotts case atomic number 18 (1) the employees role in the attach to; (2) a comparison of the employees wages with those paid by similar companies for similar services; (3) the percentage and particularise of the family; (4) potential contests of interest; (5) evidence of an internal difference in a companys treatment of payments to employees. http://ftp.resource.org/courts.gov/c/F3/221/221.F3d.1091.99-70164.html If audited by the IRS I think Mr. Kims requital would be deemed unreasonable. By using the five factors under Elliots case I determined the followi ng (1) snub due to lack of information (2)Mr. Kim foregathers twice as a good deal compensation compared to early(a) CEOs in the same industry (3)The condition of the company is profitable (4)Mr.

Kim as a dictatorial shareholder could come in a potential conflict of interest (5)The two other officers of company did not receive a bonus and there is no mention of a bonus system Based on these facts the IRS has no extract but to deem Mr. Kims compensation as unreasonable. The hardly way to prove that Mr. Kims compensation was justified is to register that Mr. King is an invaluable employee of the comp any and as such he works longer and harder t! han any other officer of the company. Assuming that 2007 is a typical year for KimTech, in terms of profitability and compensation practices, evaluate the reasonableness of Kims compensation using the self-reliant investor/return on equity approach. Is Kims compensation package reasonable under this test? Why or why not? Under the Independent Investor Approach...If you want to come up a full essay, order it on our website: OrderCustomPaper.com

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