Tax Memorandum

MEMORANDUM
TO: Mr. Kim
FROM: Your name
DATE: December 6, 2009
RE: Tax Memo #2-Executive Compensation

recognise # 1
1.If KimTech would be audited by the IRS for 2007, Mr. Kim would like to know will his payment be deemed mediocre and what the corporation would need to show that his earnings is reasonable.
2.In Elliots case, the court stated that relevant considerations include the perspective held by the employee, duties performed, and hours worked as well as the general wideness of the employee to the achievement of the fraternity provide significant insights into the reasonableness of the remuneration scheme. Comparison of the employees salary with those paid by exchangeable companies for similar services, companys size as predictd by sales, net income or capital value, and whether some relationship exists between the taxpaying company and its employee are taken into account for reasonable determination. Also, assure of internal inconsistency 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 proven 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 independent investor/return on right approach to evaluate the reasonableness of the corporations compensation.
2.In Elliots case, A relevant inquiry is whether an inactive, independent investor would be unbidden to compensate the employee as Elliot was compensated. The nature and quality of the services should be considered, as well as the effect of those services on the return the investor is seeing on his investment....If you want to get a full essay, order it on our website: Orderessay



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