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1. What are the payroll tax consequences to Evan and Magic if the distributions are characterized as salary payments? Calculate the total potential underpayment of
1. What are the payroll tax consequences to Evan and Magic if the distributions are characterized as salary payments? Calculate the total potential underpayment of both employee and employer payroll tax that could result from this audit. Amount Years Total S Corporation $ 3,825 X 3 $ 11,475 Evan $ 3,825 X 3 $ 11,475 Total Underpayment $ 22,950 Treating the $50,000 as salary, S corporation and Evan have unpaid payroll taxes of $3,825 per year, for a total underpayment of $22,950
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