New Comparability Plans for Sole Props

[Guest brunkcb]

As part of a plan audit on a new comp plan for a sole proprietor with 2 additional participants, the IRS agent is telling me that the sole prop is limited to 15% (reduced for self employment tax, etc.) of his compensation. I replied that his position would be true if there were no other participants, but that because there are, he could get 25% (reduced for self employment tax, etc.). The agent is still insisting that the lower limit applies. Anyone have any suggestions or agree with the agent? Why?

[Mike Preston]

Just respectfully disagree and suggest that you would like a conference with his/her supervisor.