Sample Reasonable Compensation Report — See what you get.
A real report from sample inputs, in the same format as your own Cost or Market report.
White-label PDF reports in your firm’s colors come with Professional and Firm plans. Or start your own report for $199.
Using RCReports?
We ran their sample client through WageProof
Same six tasks, hours and county. Both firm-branded, side by side.
WageProof is not affiliated with or endorsed by RCReports.
The Cost, Market and Income approaches
This sample
Cost Approach
Prices each task in the role separately, using local wage data.
Market Approach
Compares the role to one comparable occupation in the area.
Income Approach
Weighs the pay against the company’s financial return, for tax professionals.
What is a reasonable compensation report?
A reasonable compensation report is a written analysis that documents a defensible salary for an S corporation owner-employee.
It matches the owner’s actual duties to market wage data from the BLS Occupational Employment and Wage Statistics program and shows the work, so the number can be supported if the IRS questions it.
Executive Summary
Labeled with its approach, with the BLS source just below.
Plus the BLS release and the wage-growth adjustment.
Cost Approach Detail
Every row here uses the 50th.
Sample Written Consent
It sets one person’s annual pay at the report’s figure, with a blank for the date.
Its notice says a qualified attorney should review it before the members adopt it.
Full Methodology
26 U.S.C. §162(a)(1), the Treasury regulation and the IRS Job Aid, each cited.
Here, the Cost Approach.
One occupation’s published wage, at the recorded experience level, times the hours spent.
Every wage figure comes from a published BLS table, listed on the page, so your CPA, an IRS examiner or anyone else can check it against BLS.gov.
Reasonable compensation report FAQ
A reasonable compensation report is a written analysis that documents a defensible salary for an S corporation owner-employee. It matches the owner’s actual duties to market wage data, such as the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics program, and shows the methodology so the figure can be supported if the IRS questions it.
What reasonable compensation means →A WageProof report opens with an executive summary carrying the bottom-line salary figure, then an approach detail page with one row per task: wage area, BLS wage percentile, hours and rate. Appendices follow: a salary resolution template matched to the entity type, a full methodology setting out the standard and every step of the calculation, and supporting tables showing that method applied to this report’s own figures. The annotated sample on this page walks through them.
Any S corporation owner who works in the business and takes distributions should be able to support their salary, and the CPAs, EAs, and tax advisors who advise them use these reports to set payroll and build an audit file. It’s most valuable as documentation made when you set the salary, not after an audit notice arrives.
A single report is $199. Tax professionals can also choose an annual plan: Starter $499/year for 10 reports, Professional $999/year for 30, or Firm $1,499/year for 60 ($24.98/report on the Firm plan at 60 reports). Professional and Firm add white-labeling.
See pricing →The report documents a transparent methodology, ties every wage figure to a published BLS source anyone can check, and includes a salary resolution template. The IRS Job Aid’s first step for spotting a pay issue asks whether a company keeps records, made at the time, of how pay was set and whether salary surveys or comparables were used, and a report like this is that kind of record. Reasonable compensation is a facts-and-circumstances determination, so no report can guarantee an audit outcome, but a documented, market-based analysis is far stronger than an unsupported number. It is not a substitute for advice from your own tax professional.
How the calculation works →For tax professionals
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