Tax practitioners use S corporations to mitigate self-employment taxes by classifying only a portion of entity distribution as wages and classifying the rest as dividends. This article analyzes recent cases where courts have invalidated attempts to lessen the burden of employment taxes by multiple-entity planning with the use of pass-through entities. This article focuses on two common practitioner flaws -- (1) deficiencies in salary setting procedures, and (2) deficiencies in multiple-entity planning. The article demonstrates the importance of setting a reasonable salary by documented procedures in S corporation taxation. The article also demonstrates how multiple-entity planning can be more effective by properly documenting and respecting the individual identities of the entities.