Suder v. Commissioner (2014)

• Owner who made $10 million per year and was qualified at 75% each year
• Credible testimony presented related to his activities
• “Reasonable” standard = paid under like circumstances for like activities
• Expert “Compensation” testimony from the IRS and an outside consultant
• Both experts compared Mr. Suder’s wages to those of other owners of like enterprises
• Court allowed wages for base salary, annual incentive, and long-term incentive (~$2.5 million per year)

Main Issue:

• Executive Compensation

Facts:

• “Reasonable” standard = paid under like circumstances for like activities
• Expert “Compensation” testimony from the IRS and an outside consultant
• Both experts compared Mr. Suder’s wages to those of other owners of like enterprises

Conclusion:

• Court allowed wages for base salary, annual incentive, and long-term incentive (~$2.5 million per year)

Take-Away Point:

• Executives performing qualified, technological activities can substantiate their activity through contemporaneous documentation and credible testimony