IRS S Corp Stats
Posted November 23, 2018
Let’s jump right into some numbers first before going through reasonable S Corp salary theory developed from IRS revenue rules and Tax Court cases. The following table is a summary generated from IRS statistics on S corporation tax returns for the 2013 tax year. Yes, this is the most current. No, we do not know why a room full of servers can’t crunch this in real-time. So here we are-
| Annual Receipts | Gross Receipts Per Return |
Net Income Per Return |
Officer Comp Per Return |
Officer Comp % of Net Income |
| $25,000 to $99,999 | 62,552 | 6,672 | 8,871 | 57% |
| $100,000 to $249,999 | 168,051 | 22,194 | 22,786 | 51% |
| $250,000 to $499,999 | 365,476 | 37,732 | 43,158 | 53% |
| $500,000 to $999,999 | 720,013 | 58,351 | 67,474 | 54% |
| $1M to $2.5M | 1,572,621 | 119,808 | 110,911 | 48% |
First some quick observations. Officer compensation is added back to net income to determine officer comp as a percentage of net income. Next, this is all industries from capital intensive manufacturing to personal services business such as attorneys, doctors, consultants, engineers and accountants.
Also, this includes S Corps who lost money, and whether they lost money and continued to pay a reasonable shareholder salary (Officer Compensation) is unclear. In other words, if losses were teased out would Officer Compensation be reduced as a percentage of net income? We cannot quickly determine.
Here is the same data grouped by gross receipts but detailed by selected industries. First one is $100,000 to $249,999 in gross receipts-
| $100,000 to $249,999 | Gross Receipts Per Return |
Net Income Per Return |
Officer Comp Per Return |
Officer Comp % of Net Income |
| Finance and Insurance | 160,359 | 34,408 | 23,213 | 40% |
| Real Estate | 165,375 | 38,231 | 28,193 | 42% |
| Professional, Scientific | 163,151 | 32,910 | 35,404 | 52% |
| Health Care | 174,383 | 24,622 | 36,026 | 59% |
And now for $250,000 to $499,999 in gross receipts-
| $250,000 to $499,999 | Gross Receipts Per Return |
Net Income Per Return |
Officer Comp Per Return |
Officer Comp % of Net Income |
| Finance and Insurance | 366,533 | 77,518 | 62,329 | 45% |
| Real Estate | 359,163 | 65,419 | 51,151 | 44% |
| Professional, Scientific | 355,693 | 71,136 | 74,493 | 51% |
| Health Care | 378,147 | 51,553 | 75,382 | 59% |
There you go. Remember that Officer Compensation includes all fringe benefits such as self-employed health insurance and HSA contributions, and it might be influenced (increased) by those who want to maximize 401k deferrals and / or defined benefits pensions. In other words, people with more discretionary cash wanting to defer taxes might increase salaries to do so.
Taxpayer’s Comprehensive Guide to LLCs and S Corps : 2019 Edition
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