Tax Memo #2-Executive Compensation

anticipate that 2007 is a typical year for KimTech, in terms of favourableness 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 commonsense? wherefore or why non? What can KimTech do to take the stand that Kims pay is reasonable? The tailfin factors under Elliotts case argon (1) the employees role in the attach to; (2) a comparison of the employees salary with those paid by similar companies for similar services; (3) the vulcanized fiber and particularise of the family; (4) potential struggles of interest; (5) evidence of an internal distinction 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 deter mined the following (1) sneak due to lack of information (2)Mr. Kim achieves twice as overmuch compensation compared to early(a) CEOs in the same patience (3)The condition of the company is profitable (4)Mr. Kim as a unconditional 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 choice but to deem Mr. Kims compensation as unreasonable. The sole(prenominal) way to prove that Mr. Kims compensation was justified is to hand over that Mr. King is an invaluable employee of the company and as such he works longer and harder than 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 fencesitter investor/return on equity approach. Is Kims compensation package reasonable under thi s test? Why or why not? Under the Independe! nt Investor Approach...If you want to come up a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper