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>>If wife has taken nothing out of the S-corp, she does not have to take a salary.<< That's not the way I read Section 1366(e). "If an individual who is a member of the family... of one or more shareholders of an S corporation renders services for the corporation... " In other words, if the wife works there she MUST get a reasonable wage, period. Otherwise hubby could take a little salary and a great big dividend or max out FICA, etc.