2026 Symposium Archive (Statesboro)

From MVP to CEO: An Analysis of Reasonable Compensation and Tax Implications in Athlete-Owned Enterprises

Faculty Mentor

Dr. William Brian Dowis

Location

Russell Union 2041

Type of Research

Proposed

Session Format

Oral Presentation

College

Parker College of Business

Department

School of Accountancy

Abstract

This presentation examines the concept of reasonable compensation for employees who are shareholders in closely held corporations by analyzing a case study involving professional quarterback and business owner Josh Allen.  As the sole owner of a very successful clothing brand company generating $10 million in annual revenue, Allen paid himself $750,000 in total salary, including $250,000 as a year-end bonus.  This was significantly higher than the $250,000 to $400,000 range that is typical for owners in comparable businesses.  After receiving a notice from the IRS disallowing a portion of Allen’s compensation, this case study raises a critical tax question.  When is owner compensation considered excessive and therefore is non-deductible as a business expense?

This presentation discusses and explains the evaluation of reasonable compensation by the IRS under federal tax law to prevent what are known as disguised dividends.  Key factors to take into consideration include industry benchmarks, the owner’s role in generating the sales revenue, and the size of the company.  By translating complex tax rules for corporations into insightful concepts, this presentation demonstrates how compensation decisions affect both tax liability and business strategy.

This presentation also highlights why this business issue matters far beyond tax professionals.  Business owners, entrepreneurs, and future managers all have something to gain from understanding how compensation practices influence financial outcomes for a company as well as the related laws and regulations.  Ultimately, this case study illustrates the balance between companies rewarding entrepreneurial effort and adhering to fair tax standards.

Program Description

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Start Date

4-23-2026 10:30 AM

End Date

4-23-2026 10:45 AM

Copyright

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Apr 23rd, 10:30 AM Apr 23rd, 10:45 AM

From MVP to CEO: An Analysis of Reasonable Compensation and Tax Implications in Athlete-Owned Enterprises

Russell Union 2041

This presentation examines the concept of reasonable compensation for employees who are shareholders in closely held corporations by analyzing a case study involving professional quarterback and business owner Josh Allen.  As the sole owner of a very successful clothing brand company generating $10 million in annual revenue, Allen paid himself $750,000 in total salary, including $250,000 as a year-end bonus.  This was significantly higher than the $250,000 to $400,000 range that is typical for owners in comparable businesses.  After receiving a notice from the IRS disallowing a portion of Allen’s compensation, this case study raises a critical tax question.  When is owner compensation considered excessive and therefore is non-deductible as a business expense?

This presentation discusses and explains the evaluation of reasonable compensation by the IRS under federal tax law to prevent what are known as disguised dividends.  Key factors to take into consideration include industry benchmarks, the owner’s role in generating the sales revenue, and the size of the company.  By translating complex tax rules for corporations into insightful concepts, this presentation demonstrates how compensation decisions affect both tax liability and business strategy.

This presentation also highlights why this business issue matters far beyond tax professionals.  Business owners, entrepreneurs, and future managers all have something to gain from understanding how compensation practices influence financial outcomes for a company as well as the related laws and regulations.  Ultimately, this case study illustrates the balance between companies rewarding entrepreneurial effort and adhering to fair tax standards.