Why would it make any sense that you are allowed to set a salary based on anything except 1.? And, if I understood your top level post correctly, why would it make sense for you to be able to classify caring for your children as working for the business?
Allowing people to choose arrangements that minimize their taxes, is the opposite of how tax law is supposed to work. Taxes should be based on economic reality, not what you choose to write down on paper.
It seems you are conflating what is beneficial for you, with what should be legal.
