Document the market evidence behind your C-corp salary.
In a closely-held C-corporation, the IRS can disallow owner pay it considers excessive. PeerBasis benchmarks your role against federal wage data and gives you a dated market-evidence memo to review with your tax adviser.
Excess owner pay can lose the compensation deduction.
A C-corporation deducts compensation only to the extent it is reasonable for services actually rendered (IRC §162(a)(1)). Pay an owner-employee above market, and the IRS can disallow the excess as a deduction and recharacterize it as a nondeductible dividend. A contemporaneous market benchmark helps document one part of the corporation's fact-specific analysis.
From your role to a documented salary, in three steps.
Your role and region
Pick the occupation that best fits your work, your state, and how much time you devote to the business.
See the market band
Published BLS wage percentiles for your occupation, using local wage data where available and a clearly labeled price-level proxy otherwise.
Record the evidence
A dated memo with the wage basis and a worksheet for the company-specific facts your tax adviser must evaluate.
Built on federal wage data — every figure cited.
The benchmark uses occupation-specific May 2025 U.S. Bureau of Labor Statistics OEWS annual wage percentiles. Where we carry metro-area data we use the published local wage. Otherwise we restate the national wage using 2024 BEA Regional Price Parities, disclosed as a consumer price-level proxy rather than observed local pay.
When fewer than 40 weekly hours are entered, each annual wage percentile is multiplied by hours ÷ 40. This linear effort scaling is a modeling assumption, not an observation of wages paid to part-time workers.
This addresses one commonly considered factor in a reasonable-compensation analysis: what comparable employers pay for similar services. The memo also provides independent-investor questions to complete with the company's own figures and your adviser.
- OEWS wage estimates include straight-time gross pay and certain cash incentive pay, including commissions and production bonuses. They exclude overtime, severance pay, shift differentials, nonproduction bonuses, employer costs for supplementary benefits, and tuition reimbursements.
- An occupation (SOC) code is a proxy for your role, not an exact match; pick the closest and document it.
- Reasonableness also turns on the company's results — the independent-investor test asks whether investors keep an adequate return after the pay.
- Deductibility depends on facts only you know — qualifications, duties, time devoted, and the corporation's financials.
Free to preview. $19 for the records memo.
See where your salary lands — for any occupation and state.
- ✓ Your occupation-and-region wage band and estimated position between published percentile knots
- ✓ Market distribution for your role and region
- ✓ The methodology and BLS sources
A dated PDF for your records and adviser review — everything in the preview, plus:
- ✓ The reasonableness-factor worksheet
- ✓ The independent-investor test framing
- ✓ A conclusion worksheet for review with your tax adviser
- ✓ The full wage-basis table, dated and sourced
The memo organizes market evidence and questions for adviser review; it is not a valuation opinion or a substitute for professional advice.
Frequently asked
What is reasonable compensation for a C-corp owner?
A C-corporation may deduct compensation paid to a shareholder-employee only to the extent it is reasonable for the services actually rendered (IRC §162(a)(1)). The analysis is fact-specific and can include the role and hours, the company's results, internal pay practices, and comparable pay for similar services. PeerBasis benchmarks the market-wage factor against U.S. Bureau of Labor Statistics wage data for your occupation and region.
Why does it matter — what's the risk?
In a closely-held C-corp, paying an owner-employee above market lets earnings leave as deductible salary instead of nondeductible dividends. If the IRS finds the pay excessive, it can disallow the excess deduction and recharacterize it as a dividend. Contemporaneous market evidence is one part of the fact-specific record the corporation and its adviser should evaluate.
What is the independent-investor test?
Some courts ask whether a hypothetical independent investor would be satisfied with the company's return on equity after the owner's compensation is paid. That analysis requires company-specific profit, equity, dividend, and risk facts that PeerBasis does not collect. The memo provides a worksheet for your CPA or tax adviser; it does not calculate or decide the test.
Where does the wage data come from?
The U.S. Bureau of Labor Statistics Occupational Employment and Wage Statistics (OEWS) program — the federal wage survey covering hundreds of occupations. Where local OEWS data are available, PeerBasis uses those published wages. Otherwise it shows a national wage estimate adjusted with the Bureau of Economic Analysis Regional Price Parity, a consumer price-level proxy rather than an observed local wage.
Does this apply to personal-service corporations?
The §162(a)(1) reasonableness requirement also applies to personal-service C-corporations. Pick the occupation that best captures the services performed. If you enter fewer than 40 hours, PeerBasis linearly scales the annual wage percentiles by hours ÷ 40; that is a modeling assumption, not observed part-time wage data. Have your adviser consider the company-specific facts that the benchmark does not capture.
Is this tax or legal advice?
No. PeerBasis provides wage benchmarking data and a documentation template to support a good-faith reasonable-compensation determination. It is not tax or legal advice; consult your CPA or tax advisor on your specific facts, including the company's financial results and the independent-investor analysis.
What does it cost?
The wage band, percentile, and methodology are free to preview for any occupation and state. The downloadable memo — with the wage evidence, reasonableness-factor worksheet, and independent-investor questions for adviser review — is a flat $19.
Find a salary you can document.
Preview your wage band free in under a minute; $19 for the records memo and worksheets.