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

Year	Gross Receipts	Net Income
1	$376,453	$122,605
2	405,244	161,660
3	518,189	231,454

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, Moon transferred $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 Moons 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.