<p style="text-align: justify;"><strong>Watson, P.C. v. U.S., (DC IA 12/23/10) </strong></p>
<p style="text-align: justify;">An Iowa district court has concluded that an S corporation shareholder-employee’s $24,000 salary in 2002 and 2003 was unreasonably low, and allowed the IRS to reclassify over $134,000 of dividend payments to the shareholder-employee as salary.  As a result, the corporation now owes employment taxes, penalties and interest on an additional $134,000 of wages.</p>
