Tax Memorandum

MEMORANDUM TO: Mr. Kim FROM: Your name DATE: December 6, 2009 RE: valuate Memo #2-Executive Compensation recognise # 1 1.If KimTech would be audited by the IRS for 2007, Mr. Kim would standardized to know will his payment be deemed intermediate and what the corporation would need to show that his earnings is just. 2.In Elliots case, the court tell that relevant considerations include the perspective held by the employee, duties performed, and hours worked as sound as the general wideness of the employee to the achievement of the fraternity proffer signifi brush offt insights into the erudition of the remuneration scheme. Comparison of the employees compensation with those paid by exchangeable companies for similar services, companys size as predictd by sales, net income or metropolis value, and whether some relationship exists between the taxpaying company and its employee argon taken into account for reasonable determination . Also, assure of internal incompatibility in a companys treatment of payments to employee whitethorn 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 free-lance investor/return on ri! ght approach to evaluate the reasonableness of the corporations compensation. 2.In Elliots case, A relevant inquiry is whether an inactive, free-lance investor would be unbidden to compensate the employee as Elliot was compensated. The nature and fibre of the services should be considered, as well as the opinion of those services on the return the investor is seeing on his investment....If you essential to get a full essay, order it on our website: OrderCustomPaper.com

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