S-Corp reasonable salary and flipping

[Giedrius C.]

Hi all,

I read through forums but haven't seen an answer to the question what is a reasonable salary for 1 owner S-Corp LLC that flips houses? Let's say everything is outsourced - houses are bought from wholesalers, GC does the rehab, realtor sells the house. The owner just finances the business and makes decisions. If there are 1-3 flips a year, the owner will spend only a few hours every month on overlooking the operations. Is it reasonable in the eyes of IRS for the owner to get paid per hour instead of fixed monthly salary? To me it wouldn't be reasonable to pay let's say $5k a month to someone who makes 5 phone calls a month, but IRS could think differently and likely there are precedents already.

Most responses in similar threads are "talk to an accountant" or "pay 60% of the profits and everything will be fine" which is not helpful, it's always safe to pay maximum tax and most accountants who have no experience in the matter will advise that. I'd like to hear from people who are in similar situations or even got audited by IRS and have personal experience in how a situation like this is treated. I appreciate any help. Thanks.