Group Administration Premium Services, Inc., et al. - Page 13

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          Issue 1.  Corporate Expense Deductions                                      
               The corporate petitioners bear the burden of establishing              
          that they are entitled to the deductions claimed on their 1989              
          pro forma tax returns.  Rule 142(a); Welch v. Helvering, 290 U.S.           
          111, 115 (1933).  After concessions by the parties, four business           
          expense categories remain in issue.                                         




          8(...continued)                                                             
          from GAPS.  However, respondent did not apportion the adjustments           
          between the corporations, instead reducing the total amount of              
          payments by the total amount of adjustments to arrive at a total            
          amount of $145,428 in corporate distributions.  Only at this                
          point did respondent apportion this amount between the two                  
          corporations to arrive at the amounts of $105,220 and $40,208 for           
          GAPS and JJM respectively.                                                  
               We have worked backwards from the amounts of $105,220 and              
          $40,208 to reapportion the $212,380 between GAPS and JJM,                   
          assuming that petitioner deposited his Mass Mutual wage payments            
          in the JJM account.  We therefore assume that respondent reduced            
          the JJM payments by this amount.  It is clear from the record               
          that the $4,000 in wages and the loan amount of $10,000 are                 
          allocable to JJM.  We have likewise assumed that the $6,259 of              
          non-employee compensation was from GAPS.  It is clear from the              
          record that the loan amount of $8,281 is allocable to GAPS.  With           
          these adjustments we arrive at the following amounts:                       
                                                         GAPS        JJM              
          Amount of distribution in statutory notice     $105,220  $40,208            
          Non-employee compensation and wages            6,259     4,000              
          Mass Mutual payments                           ---       38,412             
          Shareholder loans reflected on the Schedules L 8,281     10,000             
          Total payments                                 119,760   92,620             
               At trial, respondent allowed an additional reduction in the            
          amount of distributions for advertising expenses and conceded               
          additional deductions therefor of $655 and $656 by JJM and GAPS,            
          respectively.                                                               




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