If your S-Corp earns $500,000 as a 1099 physician, someone will tell you to pay yourself $80,000 and take the rest in distributions. The IRS disagrees. Your salary must be reasonable. So what should it actually be, and can you defend it in an audit?

In this episode, CPA and certified private wealth advisor Stephen Lee walks through a real-world case study of a 1099 radiologist making $500,000. He explains why percentage rules of thumb don't work for physicians, who personally generate nearly every dollar of revenue. You'll learn the five core criteria for setting a defensible salary: specialty, hours worked, scope of duties, geography, and business, and how to use W2 replacement cost as a practical benchmark instead of guessing.

Stephen also breaks down the actual math at different salary levels ($100K, $250K, and $350K), showing how each affects your distributions, payroll tax savings, and audit risk. He shares a five-step playbook for documenting your salary and warns against common mistakes like picking an arbitrary number in December or blindly copying a colleague's setup. The episode closes with the radiologist's real result, a defensible $250,000 salary backed by market data, and how reasonable compensation impacts your solo 401(k), cash balance plan, and pass-through entity tax strategy.

Resources & Links:

• 📅 Book a complimentary 15-minute discovery call with Stephen Lee: https://thelocumcpa.com/book-appointment/?utm_source=podcast
• 📗 The CPA's Guide to Locum Tenens: https://thelocumcpa.com/cpas-guide-to-locum-tenens/?utm_source=podcast