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Bonnie and Clyde each own one-third of a fast food restaurant, and their 13-year old daughter owns the other shares. Both parents work full time in the restaurant, but the daughter works infrequently. Neither Bonnie nor Clyde receives a salary during the year, when the ordinary income of the S corporation is $180,000. An IRS agent estimates that reasonable salaries for Bonnie, Clyde, and the daughter are $30,000, $35,000, and $10,000, respectively. What adjustments would you expect the IRS to impose upon the taxpayers?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9983279

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