U.S. courts have established multiple factors and guidelines to assess reasonableness in compensation. This article reviews the factors and statutory criteria used to assess the reasonableness of compensation. Determining reasonable compensation for shareholder employees in closely held companies remains a key concern for businesses, valuation professionals, and forensic accountants. U.S. courts, particularly the Tax Court, have established multiple factors and guidelines to assess reasonableness in compensation, most notably detailed in the cases of Mayson Manufacturing Co. v. Commissioner (1949) and Elliotts, Inc. v. Commissioner (1984). The 6th Circuit Court’s opinion in Mayson Manufacturing includes the following description of key factors:…