Research Problem $2.$ Sean Moon is president, secretary$,$ treasurer, sole director, and sole shareholder of Streetz, an S corporation real estate company. He man$-$ ages all aspects of the company$$s operations, and he is the only person working at the company that holds a real estate broker$$s license. Sean works $12-$hour days and takes few days off. Streetz$$s gross receipts and net income figures were reported as follows.

Year

$123$

Gross Receipts

$$376,453405,244518,189$

Net Income

$$122,605161,660231,454$

Sean and his wife, Kim, filed joint Federal income tax returns, but they did not report any wages or salaries on line $7$ of their Forms $1040.$ During year $3,$ Sean trans$-$ ferred $$240,000$ from the S corporation to his personal account.

You are an expert witness for the IRS. Identify the items you would present to the U$.$S$.$ Tax Court with respect to the amount of Sean$$s compensation that is subject to employment taxes and any other taxes due for year $3($especially the Medicare net investment income tax$).$ Hint: This is a reasonable compensation issue.