Owner compensation normalization

Adjusting recorded owner compensation and demonstrably personal or unnecessary expenses to the fully loaded market cost of replacing the required work. The adjustment can increase or decrease earnings and requires evidence.

Owner compensation normalization in practice

Hypothetical: compare an owner’s recorded pay and benefits with the cost of replacing the owner’s actual duties over the same earnings period. A relative’s pay remains to the extent necessary work must be performed, and legitimate business vehicle costs remain. Only supported differences enter the adjustment.

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