Question
Troy is the sole shareholder and CEO of BQT. BQT is a very profitable S corporation. Until recently, Troys salary was in line with the
Troy is the sole shareholder and CEO of BQT. BQT is a very profitable S corporation. Until recently, Troys salary was in line with the salaries of comparable CEOs. However, Troy recently learned that he could reduce his tax burden, if he were to reduce his salary. By lowering his salary Troy would receive less employee compensation that is subject to FICA tax and is not eligible for the qualified business income deduction, and he would be allocated more business that is not subject to FICA tax and qualifies for the qualified business income deduction. After considering the potential benefits, Troy decided to cut his salary in half. Do you think Troys decision is ethical? Why or why not?
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