OK, let's be reasonable... The lawsuit you cited was not for a sole owner S-corp. It was for a business that was well-established (24 years) with MANY employees...
My figure comes from researching actual IRS cases. The IRS in one case determined that $47,000 was too low, and in another determined that $50,000 was sufficien...
Your statement "...a distribution of income of the S corporation to a shareholder is a tax-free payment." Is incorrect. It is subject to Federal Income Tax.
