328 Planning and Forecasting an arrangement would be disastrous to Brad, since the IRS would currently assess income tax to Brad on such an arrangement, using the much criticized “economic benefit” doctrine. Under this theory, monies irrevocably set aside for Brad grant him an economic benefit (presumably by improving his net worth or otherwise improving his creditworthiness) upon which he must pay tax. If Brad were aware of this risk, he might choose another method to protect his eventual payout by requiring the corporation to secure its promise to pay with such devices as a letter of credit or a mortgage.
