Good Question. There are many factors that could raise a red flag with the IRS. The top two are: Reasonable Compensation and Distributions. Because these two factors are almost always tied to one another having a defensible Reasonable Compensation figure is your best defense. For more on creating a defensible position on Reasonable Compensation please see: How Do You Know If Compensation Is Unreasonable?: https://rcreports.com/resources/reasonable-compensation-blog/how-do-you-know-if-compensation-is-unreasonable/