21
1987 for wages and management services amounting to $1,231,127.10
Because we do not know how much of the $225,203 claimed by
Alondra as a rent deduction is supposed to have been paid to
third parties, we cannot determine the exact relationship of this
amount to the rental income that Mr. Munro reported as such in
his 1987 individual income tax return. However, Mr. Munro's
reporting of rental income appears consistent with the rental
payments that petitioners claimed as deductions.
Edco has documented payments of $37,658 to Pertinax during
Edco's fiscal 1987 for wages and management services. Mr. Munro
appears to have included the $7,200 claimed by Edco as a rent
deduction in the rental income that he reported in his 1987
individual income tax return as rental income.
Pertinax, in its U.S. Partnership Return of Income for 1987,
reported as gross income $2,649,859 in management fees. It
deducted $1,655,942 for salaries and wages and $500,000 for
"management". Respondent, having determined that reasonable
compensation for Mr. Munro was $142,823, disallowed the $500,000
management deduction and $357,289 of the deduction for salaries
and wages claimed by Pertinax.
10Respondent concedes that petitioners have documented
$1,198,407 through one exhibit and an additional $32,450 through
another pair of exhibits. In fact, however, the first of these
exhibits, by our calculation, documents $1,198,677. As a result,
the total documented is $1,231,127, not $1,230,857, as respondent
calculates.
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