I understand your point, but I just don't know that it matters anymore. Regardless of the original intent of SS, what it is now is a tax on those who are working to support those who are retired. No question it is that way because it's been butchered, but I was just addressing where we are--not where we should be. Legitimate fixes to SS are not politically possible, imo.
They would be better off paying them selves the bonus if they are a Sub-s or C-corp -
If they are an LLC/1065 they are drawing out profits (EARNED INCOME) that are then subject to SS & medicare & high tax rate (Income subject to self employment) - and just accounting for it incorrectly on thier personal tax return and opening up a huge potential liability - (most likely)
If they are a sub-s they could be drawing out excess earnings and subject to a higher tax and basis charge (which is 2nd most likely) - just deferring the taxes until there is a partnership change and then there is a BIG price tag -
Best thing to is to hire a GOOD CPA and make sure they have their bases covered - if it is a business and they are drawing out money it is EARNED INCOME in some shape form or fashion - if it is rental, it is still subject to tax and the various basis rules but it has to be a TRUE RENTAL or it is subject SE....
''Don't be a bad dagh..."