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The size of a company, the amount of its sales, and the
volume of its sales have a definite effect on the compensation
paid to the top executives.
The following schedule shows the base salary, bonus estimated
and paid in the applicable year, and the earned bonus paid in the
following year by BI to Mr. Schoenecker, and the amounts deducted
on the corporate income tax return by BI as compensation to Mr.
Schoenecker.
FY-88 FY-89 FY-90 FY-91
Base salary $400,000 $500,000 $500,000 $500,000
Bonus:
Estimated and
paid in the
applicable
year 600,000 1,000,000 1,000,000 300,000
Earned and
paid in the
following
year -- 163,476 315,930 558,735
Amount paid
and deducted
on corporate
income tax
return 1,000,000 1,663,476 1,815,930 1,358,735
In addition, as heretofore stated, Mr. Schoenecker received
$100,000 from Animal Fair in each of its fiscal years 1988, 1989,
and 1990.
Respondent, in her notice of deficiency, determined that the
proper allowable deductions for compensation to Mr. Schoenecker
by petitioner were $354,000 for its fiscal year 1988, $380,000
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