Ethical Spite? We are going to pay $8k more in taxes.

More of a business thing but really hope to get some perspective here. Honestly just need to make sure I don’t have a big blind spot.

Wife owns 40% of a business The 2 other owners are 30% each.

While considering doing a profit sharing on top of our 401k we are at a hard impasse

The total cost of the plan is $240k about $90k goes to the employees and the rest to the owners along with some additional tax favorability.

For 401k safe harbor and IRS rules the money that goes into the owners 401k accounts is not close to proportionate to ownership percentages

30% owner 1 gets $66k 30% owner2 gets $42k 40% owner 3 gets $17k

There are additional tax advantages to the company and the owners.

As the 40% owner my wife is asking how she gets “made whole”. We have always distributed money 30/30/40 other than base salary’s that are the same at $90k each.

The other owners are refusing to make any correction for the disparity.

She is unwilling to support the profit sharing because of this one thing.

At the end of it all we will pay an additional $8k in taxes because of this, the other 2 owners will loose out much more.

I hate to see it like this but don’t understand how she could support a distribution that is not pro rata.

The CPA still thinks we should do it and seems to think we are looking at it wrong.

What am I missing?