The SCORP Trap · 60 seconds · 3 toggles
You elected S-Corp. Did you trap yourself?
One election. Three traps: Payroll · QBI · Built-In Gains. QBI §199A · Reasonable comp §1362 · BIG tax §1374. Most owners pay for the fix only after the notice. $2k–$8k per fix — cheaper than the IRS version.
No pitch. Just the trap. Authority: taxguide.tax/guide/chapter-9 (Entity) · 564p · cited to primary law. Read the opening pages free
The 60-second check
Three questions. One trap score.
Takes 60s · No email to see result
This is a screen, not advice. Your facts control. Ch. 9, pp.131–150
Trap level
MED — reinforcements needed
You’re in the gray zone. One of the three traps is probably costing you — usually payroll or QBI.
- Payroll true-up before 12/31 can move QBI + reasonable-comp exposure
- QBI modeling: salary too low ≠ more deduction
- BIG clock check if you converted
Fee depends on comp study, payroll filings, and whether revocation is on the table. IRS version costs more.
Get my trap report →Or keep scrolling — the 8 video answers are below.
Video is the answer — 5–10 seconds each
Eight answers. Watch, don't read.
Every answer cites Chapter 9 + primary law · Transcript inside
Trap #0 · The election itself
Did my S election trap me?
You elected S to save SE tax — that saved one tax and opened three traps
Read the transcript (for accessibility)
“You elected S to save SE tax. That saved one tax — and opened three traps: reasonable comp, QBI, and built-in gains. If any is off, the election is costing you.”
Source: THE TAX CUTTERY® Guide, Ch. 9 — Entity Selection (pp.131–150) · IRC §§1362 (S election), 1374 (BIG), 199A (QBI). 564p book citations: authorities.jsonTrap #1 · Payroll
Is my salary “reasonable” — or audit bait?
There’s no safe harbor — the IRS recharacterizes low distributions as wages
Read the transcript (for accessibility)
“There’s no safe harbor. The IRS recharacterizes low distributions as wages — payroll tax, penalties, and interest. A comp study is cheaper than a reclass.”
Ch. 9.5 Reasonable Compensation · §1362 S election rules · See authorities §1362Trap #2 · QBI
Am I losing the 20% QBI deduction?
Your W-2 wages set your QBI limit — pay too little and the 20% shrinks by design
Read the transcript (for accessibility)
“Your W-2 wages set your QBI limit. Pay too little and the 20% shrinks — by design. SSTBs phase out completely. We model it.”
§199A Qualified Business Income · Ch. 9.8 OBBBA impact · authorities §199A (28 references)Trap #3 · BIG
Do I have hidden built-in gains tax?
C to S inside five years? Sell appreciated assets and the corporation pays tax on the old gain
Read the transcript (for accessibility)
“C to S inside five years? Sell appreciated assets and the corporation pays tax on the old gain — on top of your tax.”
§1374 Built-in Gains · Ch. 9.9 Restructuring · authorities §1374Exit
Should I revoke the S and go back?
Revocation locks you out of S for five years — sometimes the trap is cheaper to reinforce
Read the transcript (for accessibility)
“Revocation locks you out of S for five years and can trigger gains. Sometimes the trap is cheaper to reinforce than to spring.”
Ch. 9.9 Changing Entity Classification · §1362(d) termination · taxguide.tax/guide/chapter-9QBI deep cut
What counts as QBI — and what doesn’t?
Wages, capital gains, interest — not QBI. Only net qualified business income counts
Read the transcript (for accessibility)
“Wages, capital gains, interest — not QBI. Only net qualified business income counts, and service businesses phase out.”
§199A(c) qualified business income · authorities §199A · Ch. 9 + 12Timing
Can I still fix payroll before year-end?
Extra payroll before December 31 changes wages, QBI, and reasonable-comp exposure
Read the transcript (for accessibility)
“Yes — extra payroll, bonus, or true-up before December 31 changes wages, QBI, and reasonable-comp exposure. After that, you’re filing history.”
Entity timing · Ch. 9.5 + Ch. 5 Timing · taxguide.tax/guide/chapter-9The fee
What does unwinding the trap cost?
Most fixes are $2k to $8k — the IRS invoice is never that polite
Read the transcript (for accessibility)
“Most fixes are $2k to $8k — comp study, payroll, QBI model, or structured exit. The IRS invoice is never that polite.”
Ch. 9 Entity Selection · 564p Professional Edition · taxguide.tax · Read sampleAll 8 videos share one poster + source until final cut. Replace /videos/avatar/trap-q*.mp4 with final 5–10s clips. Structure stays valid.
Live — cited, not guessed
Ask the trap. Get a cited answer.
Powered by taxcuttery.net/api/chat · Shows citations + book CTA
Trap line — live
CORS · taxcuttery.netSame brain as taxcuttery.net. This island fetches https://taxcuttery.net/api/chat with CORS — sameOrigin would fail cross-origin. If CORS blocks, we fall back to local POST and email capture.
Authority — not a blog post
The Guide behind the trap. 564 pages.
THE TAX CUTTERY® Guide to Federal Income Taxation
Professional Edition · 564p · by Paul D. Diaz, EA, MBA — Enrolled Agent admitted to practice before the IRS.
Entity traps live in Chapter 9: Entity Selection and Restructuring (pp.131–150). Every video answer on this page cites it — plus the Code: §1362, §1374, §199A. The book is the receipt.
$299 hardcover. Pay on this page (Lulu) or at taxguide.tax/buy. Printed to order.
Cite as: Diaz, Paul D., THE TAX CUTTERY® Guide to Federal Income Taxation, Professional Edition, Chapter 9. taxguide.tax/guide/chapter-9
Get the report