IRS S Corp Stats

Created OnNovember 19, 2017

Last Updated OnOctober 28, 2019

bycyberbasement

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.

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