Lumber City Corporation, f.k.a. Neiman-Reed Lumber and Supply Company, Inc. - Page 2

                                        - 2 -                                         

                              Additions to Tax                                        
       Section        Section      Section    Section  Section                        
       Year Ended   Deficiency 6653(a)(1)(A)16653(a)(1)(B) 6653(a)(1) 6653(a)(2) 6661(a)   
       Feb. 29, 1988  $352,217     $17,611           *        $  --         --     $88,054
       Feb. 28, 1989   398,225       --              --        19,911       *       99,556
       Section                                                                        
       Year Ended      Deficiency      6662(a)                                        
       Feb. 28, 1990     $863,235       $172,647                                      
       Feb. 28, 1991      366,344         73,269                                      
       * 50 percent of the interest due on the portion of the underpayment attributable to
       negligence.                                                                    
               The only issue remaining is to determine the amount of the             
          deduction for petitioner's taxable year ended February 28, 1990,            
          to which petitioner is entitled under section 162(a)(1) for                 
          reasonable compensation paid to Jesse Ruf, its sole shareholder             
          and chief executive officer (CEO).  We hold that the amount of              
          the deduction to which petitioner is entitled is $1 million.                
                                  FINDINGS OF FACT2                                   
               Petitioner, Lumber City Corp. (Lumber City), is a California           
          corporation whose principal place of business was in Van Nuys,              
          California, at the time the petition was filed.                             
               Petitioner was formed in 1948 by Robert Neiman (Mr. Neiman)            
          and Robert Reed (Mr. Reed) as Neiman-Reed Lumber and Supply Co.,            
          Inc.  Petitioner began operations as a wholesale lumber operation           
          and expanded to include a chain of retail home and garden im-               


          1  All section references are to the Internal Revenue Code in               
          effect for the years at issue.  All Rule references are to the              
          Tax Court Rules of Practice and Procedure.                                  
          2  Except as noted, the record is unclear as to the timing of               
          certain events.  However, the inadequacy of the record in that              
          respect does not affect our resolution of the issue presented.              




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011