Tax Memorandum

MEMORANDUM TO: Mr. Kim FROM: Your name DATE: December 6, 2009 RE: levy Memo #2-Executive Compensation recognise # 1 1.If KimTech would be audited by the IRS for 2007, Mr. Kim would equivalent to know will his payment be deemed just and what the corporation would need to show that his earnings is comely. 2.In Elliots case, the court stated that relevant considerations include the perspective held by the employee, duties performed, and hours worked as healthful as the general wideness of the employee to the achievement of the fraternity bid signifi trickt insights into the rationality of the remuneration scheme. Comparison of the employees requital with those paid by exchangeable companies for similar services, companys size as predictd by sales, net income or capital of the United States value, and whether some relationship exists between the taxpaying company and its employee are taken into account for reasonable determinati on. Also, assure of internal unlikeness in a companys treatment of payments to employee may 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 proved 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 th e strong-minded investor/return on right a! pproach to evaluate the reasonableness of the corporations compensation. 2.In Elliots case, A relevant inquiry is whether an inactive, freelancer investor would be unbidden to compensate the employee as Elliot was compensated. The nature and prime(prenominal) of the services should be considered, as well as the military force of those services on the return the investor is seeing on his investment....If you requisite to get a full essay, order it on our website: OrderCustomPaper.com

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