IV. Fill in the gaps with the words or word-combinations from the list

a) reduce the percentage f) certified public accountant

b) qualms g) implausibly

c) modest salaries h) individual taxes

d) to nail i) inflate your compensation

e) employment taxes

When it comes to salary, many business owners have no 1)______about paying themselves a hefty amount. What many owners fail to recognize, however, is that you can get into big trouble at tax time if you 2)____________.

Say you own a C corporation with $500,000 in profits (in other words, taxable income). You might be tempted to reduce that profit - and thus 3)__________of it you have to pay Uncle Sam - by giving yourself a well-deserved six-digit year-end bonus.

Although that practice may not seem like a crime, the IRS is wary of such behavior, especially if it 4)____________inflates an owner's salary given the business's size and industry. However, Richard M. Colombik, a lawyer and 5)_____________who runs International Tax Associates, in Schaumburg, Ill., stresses that you really need to be concerned only if you're paying yourself a mega salary. "It's rare that I've seen salaries of less than $500,000 get challenged," he says.

But that doesn't mean owners with 6)____________have nothing to fear. If you are the sole owner of an S corporation, you can also run afoul of the IRS for paying yourself too little. "There is an incentive to minimize compensation in order to save on 7)__________," says Steven Paul, a tax lawyer at Palmer & Dodge, in Boston. But this offense seldom triggers an audit for two reasons. First, owners of S corporations rarely do it, since they know that the government is going to 8)________them on their 9)______________anyway. Second, if the salary is equal to or over the FICA ceiling of $76,200, the IRS stands to recover only 2.9% of the excess, so it's probably not worth the agency's time.