But, we are already getting paid as W2 employees fair market value compensation for the work performed for the company.
You're saying that in addition to that, we will need to make sure that the K-1's reflect a "reasonable" amount paid to ourselves? Example again: $100k gross - $25k wife W2 -$25k husband W2 = $50k - $25k business expenses = $12,500 K-1 to wife and $12,500 K-1 to husband. So, we would only be liable for self employment taxes on the K-1 amounts.
But, we CANNOT do $100k gross - $37,500 wife W2 - $37,500 husband W2 - $25k business expenses = $0 for both K-1's to husband and wife ?
