Does a officer of a C Corporation have to report all compensation for payroll tax purposes? Or can a officer receive other forms of compensation?

[Anonymous]

if below-market interest is charged then IRC Section 7872 comes into play. if the loan interest rate is above the applicable federal rate and the amount loaned does not exceed $10,000 this section does not apply.  if $10K or more and interest below the AFR the IRS requires the imputation of interest as follows

(2)Applicable Federal rate
(A)Term loans
In the case of any term loan, the applicable Federal rate shall be the applicable Federal rate in effect under section 1274(d) (as of the day on which the loan was made), compounded semiannually.

(B)Demand loans
In the case of a demand loan, the applicable Federal rate shall be the Federal short-term rate in effect under section 1274(d) for the period for which the amount of forgone interest is being determined, compounded semiannually.

For purposes of this title, in the case of any below-market loan to which this section applies and which is a gift loan or a demand loan, the forgone interest shall be treated as—
(A)transferred from the lender to the borrower, and
(B)retransferred by the borrower to the lender as interest.

to avoid such issues the loan should be documented in writing and specify an interest rate not below the required rate. the shareholder should abide by the terms especially repayment of principal and interest. 

[melissaplanu]

How can the owner of a C Corp (no income during the business year) pay himself?

[WendyN2]

If the C Corp has retained earnings (which I would hope that they do - REs are moneys held in the Corp from prior year revenues that resulted in a net profit - it's a "roll over" into the following year of "cash on hand", basically) - then the C Corp can use these REs to pay an employee.

[yihuih]

Dear Professional:

I am c-corp. I pay myself w2. I paid total 15k. Within 15k, I put 10k into my 401k account. My question is that 1120 Line12 Compensation of officer should be 15k or 15k-10k=5k? w2 box 1 is 5k. 

[Anonymous_]

Line 12 is the total amount of compensation.

[yihuih]

Is this total should be 15k before we take 10k 401k?

[Anonymous_]

Line 12 should show $5k. [edited]

[yihuih]

1120 Line 27 is adding all number from Line 12:

Is 401k 10k should be go into Line 23, and Line 12 state same as w2 box 1. This way, if 10k included in line 12 and re enter at line 23, this deduction will be doubled, am I correct?

[Anonymous_]

@yihuih 

I apologize, I misread your earlier post.

Do not include contributions to your 401k on Line 12 (enter the contribution on Line 23).