IRAC ESSAY EMPLOYMENT LAW

 Mon  E. Bags, Chief Executive Officer of Earns A Lot Enterprises, received  total compensation of $2,500,000.00 in 2017.  The compensation included a  base salary of $750,000, commission income of $1,250,000 and a  performance bonus of $500,000.  Mr. Bags’ compensation placed him in the  top 25% of all chief executive’s in the industry.

Earns A Lot  is located in State X.  While the national economy has experienced an  economic slowdown, State X has a strong and vibrant economy. Mr. Bags  has been the chief executive officer for five years.

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Earns A  Lot, which has long had a reputation for paying very competitive  salaries, recruited Mr. Bags from its chief rival, Wanna Be Industries.   When Mr. Bags became the chief executive of Wanna Be, the company was  on the verge of liquidation. Within five years, Mr. Bags took Wanna Be  from the steps of oblivion to the top of the industry.

While  Earns A Lot has a solid reputation of consistent top tier performance,  it has long believed there was room for substantial growth and so hired  Mr. Bags.  Indeed, under Mr. Bags’ leadership, Earns A Lot has seen  gross revenues grow by over 20% per year.  Nonetheless, Earns A Lot is  concerned whether the company will be able to deduct Mr. Bags’ 2017  compensation.   

Will Earns A Lot be able to deduct Mr. Bags’ 2017 compensation? 

Please write a memo answering this question, citing the appropriate authority. 

An IRAC-style essay is appropriate for this assignment.  

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