The following examples illustrate the application of this paragraph:
For the first calendar quarter
X | Y | Z |
$2,000 | $10,000 | $22,900 |
For the second calendar quarter
X | Y | Z |
$20,900 | 0 | 0 |
($22,900-$2,000) |
For the third calendar quarter
X | Y | Z |
0 | 0 | 0 |
For the fourth calendar quarter
X | Y | Z |
0 | $10,000 | 0 |
Of course, if the corporations had been related throughout all of 1979, only $22,900 of X's first quarter disbursement would have constituted wages subject to sections 3102 and 3111.
The portion of taxes previously paid by the common paymaster that is allocable to each related corporation is determined by multiplying the amount of taxes paid by a fraction, the numerator of which is the portion of the amount of employment tax liability of the common paymaster under section 3121(s) that is allocable to such related corporation under paragraph (c)(2) of this section, and the denominator of which is the total amount of the common paymaster's liability under section 3121(s), both determined without regard to any prior tax payments. These rules apply whether or not the tax on employees was withheld from the employees' wages.
Portion of wage payment constituting re- | ||
muneration to the employee for services | Tax on employees under section 3102 and | |
performed for the corporation | tax on employers under section 3111 | |
----------------------- | * | that the common paymaster is required |
Total wage payment constituting remu- | to remit with respect to the wage pay- | |
neration to the employee for all services | ment | |
performed for the related corporations | ||
using the common paymaster |
If the remuneration disbursed to an employee for services performed for a corporation is inappropriate, the district director may adjust the remuneration records of the related corporations to reflect appropriate remuneration. The district director may use the principles of § 1.482-2(b) in making the adjustments.
Example.
Wage payments | Remuneration | Tax on employers under section 3111 | Tax on employees withheld under section 3102 | Total | ||
X | Y | Total | ||||
1 | $3,000 | $1,000 | $4,000 | $245.20 | $245.20 | $490.40 |
2-3 | 8,000 | 8,000 | 490.40 | 490.40 | 980.80 | |
4 | 1,000 | 3,000 | 4,000 | 245.20 | 245.20 | 490.40 |
5 | 4,000 | 4,000 | 245.20 | 245.20 | 490.40 | |
6 | 2,000 | 2,000 | 4,000 | 177.77 | 177.77 | 355.54 |
7-13 | 10,000 | 18,000 | 28,000 | 0 | 0 | 0 |
Total | 20,000 | 32,000 | 52,000 | 1,403.77 | 1,403.77 | 2,807.54 |
The amounts of remuneration to A are determined by the district director to be appropriate. Under these facts, the tax is allocated to X and Y in the following amounts:
26 C.F.R. §31.3121(s)-1