Cynthetiq

I am not a lawyer nor am I an accountant.

Here goes nothing.

The tax implication of letting your wife take the $1M from the company is that you'll be paying double taxes on the money. First the company pays the taxes for that income, then when your wife realizes the income she too will be required to pay income tax on it. This reduces the actual benefit. This is why people like Steve Jobs get other compensation that reduces the total tax implication.

You mentioned she'd maybe getting a dividend instead. If I understand this correctly is she the sole stockholder? If she is, then you could do such a scenario, but again the tax implication is high. If not, then any dividend would have to be distributed to all shareholders as you cannot have two classes of shareholders (different from stock class shareholder ex. Viacom A stock versus B)

Why do you need to disburse the monies to her personally? Can she not continue to get expendable items paid for by the corporation such as telephone, car, travel, etc?

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