Looking to Benchmark Pay?
Research results
Q: The compensation for Loren was above the maximum reasonable compensation in the Survey and Proxy Analysis module. Does this suggest that the IRS will try to turn part of the compensation into a constructive distribution?
A: The evidence is certainly there. However, the courts have allowed large compensation in a particular year on the basis that in past years the shareholder-employee didn't take as much as they might have. A one-time payment can sometimes be justified to make someone whole after years of accumulated historical under-compensation.
Here's the major argument AGAINST allowing such a large bonus: Test 2 of reasonable compensation says that compensation must be for services rendered. This may not be true in this particular case.