[Learning with a Dragon Ball-style Parody] Hey, I don't really get tax audits! ~Is your executive compensation inflating like a Spirit Bomb?~

🕒 This article takes about 7 minutes to read.

I. Introduction

"Hey! I'm the CEO!"—to all you business owners who lead your companies with nothing but pure passion. When your performance for the term is going great, don't you ever think, "I want even stronger compensation!"?

That innocent wish might one day summon a tax auditor with a power level of 530,000 to your company.

This time, we will explain the [Rules for Executive Compensation and Disallowance of Excessively High Compensation] that many business owners fall into, while incorporating a short skit set at "Capsule Corporation Consulting."

[Character Settings]

• CEO: President Son Kuuhan 🥋

  • Role/Personality, etc.: The CEO of the universe's strongest consulting firm, "Capsule Corporation Consulting." He has absolutely no interest in management, thinking only of fighting strong guys (working) and eating his fill (eating meals). He is pure-hearted but indifferent to money.

• Female Secretary: Secretary Bulma 💊

  • Role/Personality, etc.: The CEO's business partner and the genius secretary who effectively manages the company. While she is exasperated by the CEO's indifference, she believes in his charisma and ability. When the company makes a profit, she considers her own contributions to be significant and tries to use expenses boldly.

• Auditor: Auditor Frieza 🪐

  • Role/Personality, etc.: An auditor dispatched from the Galactic Tax Agency. The emperor of the universe, called "Lord" by his subordinates. His manner is polite, but he looks down on taxpayers as "space trash." If he finds even the slightest rule violation, he tries to blow the whole company away with a "Death Ball" in the form of additional tax assessments.

• Tax Accountant: Beerus the Tax Accountant God of Destruction

  • Role/Personality, etc.: A legendary tax accountant said to be the most capricious in the universe, who will destroy an entire planet (terminate the advisory contract) if he gets in a bad mood. He usually just sleeps while looking for delicious food. However, his very existence is an absolute rule, and even Frieza is like a kitten in front of him.

II. Skit: A Tax Audit One Day... The Emperor of Terror Attacks

Setting: Capsule Corporation Consulting Office

This term, the company won a major competition against a rival firm, and company profits hit an all-time high.

💊Secretary Bulma: "Hey, Kuuhan! You're piling up the ledgers again! ...Well, never mind. The profits this term are incredible, aren't they? I need to think about compensation that matches your hard work! Alright, your pay is going up starting this month!"

🥋President Son Kuuhan: "Oh, yeah! I don't really get it, but I should just leave it to you, Bulma, right? And does this mean I can eat some good food?"

Just as Bulma was triumphantly processing the paperwork, the office door opened quietly. Standing there was a small, eerie man riding a small pod.

🪐Auditor Frieza: "Oh my, excuse me for interrupting your excitement. My name is Frieza from the Galactic Tax Agency. Starting today, I will be observing your 'little games.'"

🥋President Son Kuuhan: "Huh? Who are you? You wanna fight me?"

Frieza read the ledgers with a scouter-type terminal in his hand and said with a smile.

🪐Auditor Frieza: "Ho ho ho... wonderful profits. However, this executive compensation is not acceptable. Increasing it during the term violates the 'fixed amount salary' rule."

💊Secretary Bulma: "What did you say!? His hard work saved this planet... no, this company! What's wrong with paying him what he's worth!"

Frieza chuckled and continued with an even more ruthless point.

🪐Auditor Frieza: "Besides, even if it were within the rules, looking at the scale and profit level of your company, that compensation is unreasonably high. Shouldn't you keep the compensation lower, like the presidents of other, smaller companies?"

At those words, the expression of President Kuuhan, who had been blank until then, changed.

🥋President Son Kuuhan: "...What did you say...? Like the president of a smaller company...?"

🥋President Son Kuuhan: "Are you talking about my compensation... Are you talking about my compensationーーー!!"

The air in the office vibrated with President Kuuhan's anger. Frieza watched it, looking genuinely amused. Just as the company was about to be wiped out by a Death Ball of additional tax, a man who looked like a cat, who had been napping on the sofa, woke up with a big yawn.

God of DestructionTax Accountant Beerus: "Yawn... you're noisy. Could you not disturb my nap? ...Hmm? What is it, Frieza? What are you doing in a corner of a planet like this?"

The moment he recognized that figure, the smile vanished from Frieza's face, and cold sweat erupted.

🪐Investigator Frieza: "Lo, Lord Beerus...! W-why are you at such a remote company like this...!?"

III. What was the problem? Two traps of executive compensation

Investigator Frieza's point is perfectly valid under tax law. There are two major problems.

1. Violation of the 'fixed periodic salary' rule: As a general rule, executive compensation must be the same amount every month throughout the fiscal year to be recognized as an expense (deductible).

2. Denial of 'excessively high executive compensation': Even if the rules are followed, if the amount is judged to be 'too high' compared to the company's size, performance, or the standards of other companies in the same industry, the excess portion will not be recognized as an expense.

President Kuuhan and Secretary Brima broke these two important rules.

IV. Why did it happen? The ambition of a genius partner

• Management's indifference: The president himself is only interested in business (fighting) and leaves money and tax matters entirely to others, considering them things he 'doesn't really get'.

• Ambition and lack of knowledge of a capable partner: A partner who effectively supports the company's management, like Secretary Brima, ignores the fine details of tax law and sets bold compensation based on the pride that 'I am the one who made this company big!'

• Ignorance/disregard of rules: Thinking 'Since we made a profit, it's the company's freedom how we use it,' and not even knowing that there are strict rules for executive compensation.

V. What should have been done? The God of Destruction's whimsical judgment

So, what should have been done? Let's look at Tax Accountant Beerus's whimsical judgment.

God of DestructionTax Accountant Beerus: "Hmm... what you're saying is, well, correct. As a rule."

Frieza straightens his back and listens intently.

God of DestructionTax Accountant Beerus: "But you know, it's boring. Rules, rules. This Saiyan (Kuuhan) worked hard and increased the value of this planet (company). Isn't it natural to get compensation for that? If it's just a boring rule that restricts that, I'll just 'destroy' the rules themselves, won't I?"

A small purple energy ball forms at the tip of Tax Accountant Beerus's finger. Seeing that, Frieza turns pale.

God of DestructionTax Accountant Beerus: "...Well, whatever. I'll save face for you too. Because the pudding on this planet is quite delicious. Within 3 months after the start of the fiscal year, you can change the compensation, right? Teach them that. Make them do that from next term. Once you understand, get lost before my pudding tastes bad."

🪐Investigator Frieza: "Y-yes! I will do so! Excuse me!"

VI. Summary

This time, we explained the rules for executive compensation set in the world of Dragon Ball.

• Executive compensation cannot be changed on a whim during the fiscal year (fixed periodic compensation).

• If the compensation amount is too high, some portions may not be recognized as business expenses.

• When deciding on compensation, the battle must be won within three months of the start of the fiscal year!

The pure passion of an entrepreneur and the success of excellent partners are powerful energies that grow a company. However, if you upset the 'God of Destruction' known as the tax office, it will all be for nothing. Understanding the rules thoroughly in advance and building the strongest strategy within them is the only way to protect your company from 'destruction'.

There are many other points to check to determine the optimal executive compensation.
I have summarized everything about executive compensation here.
It comes with three major bonuses that will allow you to take action immediately after reading.
If you want to know the optimal amount for executive compensation, please check here.

If you have any concerns, please feel free to consult with us.

The skits and AI-generated images in this blog are parodies based on the world of the popular work 'Dragon Ball'. This is part of fan activities and does not involve any commercial purposes such as sales. Please refrain from unauthorized use or reproduction of these images.