- 25 -
Petitioner bears the burden of proving that respondent's
determinations are erroneous. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). If petitioner shows error in respon-
dent's determinations, the Court must decide the amount of
compensation that was reasonable based on the entire record
before us. Pepsi-Cola Bottling Co. v. Commissioner, 61 T.C. 564,
568 (1974), affd. 528 F.2d 176 (10th Cir. 1975).
In the notice, respondent allowed the entire amount of
$132,629 that petitioner deducted as compensation paid to Mr. Ruf
in its Federal income tax return for its taxable year ended
February 29, 1988, and disallowed all but $132,693 of the amount
petitioner deducted as compensation paid to Mr. Ruf for its
taxable year ended February 28, 1989, and all of the amounts
petitioner deducted as compensation paid to Mr. Ruf for its
taxable years ended February 28, 1990, and February 28, 1991. At
trial and on brief, respondent concedes that petitioner is
entitled to deduct all of the amounts it claimed as compensation
paid to Mr. Ruf for the last three years at issue except for
$2,100,000 of the $2,600,000 claimed for its taxable year ended
February 28, 1990. Accordingly, we must decide on the basis of
the record before us whether petitioner is entitled to deduct for
that year an amount of compensation to Mr. Ruf in excess of that
conceded by respondent.
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011