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Author: limitdown Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121585  
Subject: Income splitting - legal but what about an audit Date: 8/1/2004 5:51 PM
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I have a c corporation that is making A LOT more money this year than I planned. Even if I pay it all out to myself and my wife in the form of salary in order to avoid double-taxation, I will still have to pay payroll taxes, etc. on these huge amounts.

It's too late in the year to convert it to an s corp, so I was thinking of setting up a new and separate s corp. Then just have my c corp pay my new s corp huge "consulting" or other fees, which would effectively move the money into my new s corp and allow it to flow to my personal tax return and avoid payroll taxes.

Technically this is legal, but would it hold up if I got audited? What would I need to do to make the "consulting" fees legit in the case of an audit?

My CPA is lame ... he says "oh no you can't do that!" when I know for a fact that you can. I need to find a more aggressive CPA...
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