Reasonable compensation glossary
A Reasonable Compensation Study uses a small set of terms with specific meanings. This glossary defines them in plain words, and each definition is taken from a page on this site and linked back to where it came from.
The terms fall into three groups. The roles: the Preparer who builds the file, the Reviewer at your firm who signs off, and the Firm that owns the finished workpapers. The methods: the cost, market and income approaches, which an IRS job aid for its valuation professionals describes. The evidence: public wage data from the BLS OEWS program, cited by release so a reader can open the same table.
Each term page adds how the term shows up in a Study and what a Reviewer checks. The definitions describe how a Study records its work. They are not tax advice, and they do not say what any shareholder-employee should be paid.
Terms
Reasonable compensation for S corporation owners