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What are the tax advantages of having a $1 annual salary when you are the founder of a big corporation?
Posted by admin on Jan 17th, 2009
samxli asked:
Some executives from top companies only claim $1 annual salary. So then where does most of their spending money come from? If it’s from stocks and investments, don’t they need to liquidate that? How does this create a tax advantage?
Some executives from top companies only claim $1 annual salary. So then where does most of their spending money come from? If it’s from stocks and investments, don’t they need to liquidate that? How does this create a tax advantage?
They tend to have large expense accounts which unofficially replace their salaries and since work is usually their whole lives, they can use their expense accounts for just about everything.
Because almost anything on an expense account is considered a “business expense” they are tax free. This is one tool that corporations and CEO’s use to reduce tax liability.
There’s not a tax advantage. It’s mainly a combination of helping out the company, since they don’t have to pay out a huge salary, and a PR move. People in those types of jobs have enough money other then their salaries that they can maintain their lifestyles for quite awhile.