Lumber City Corporation, f.k.a. Neiman-Reed Lumber and Supply Company, Inc. - Page 48

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          Year Ended         Amount of Compensation                                   
          Feb. 29, 1988             $600,000                                          
          Feb. 28, 1989              400,000                                          
          We further find that the remaining $1,600,000 of the $2,600,000             
          that petitioner paid Mr. Ruf during its fiscal year ended                   
          February 28, 1990, was for services he provided during that year            
          and that only $800,000 of that amount was a reasonable amount of            
          compensation for those services.26  Accordingly, we find that a             
          total of $1,800,000 constitutes reasonable compensation within              
          the meaning of section 162(a)(1) for which petitioner is entitled           


          26  To summarize, based on our review of the entire record in               
          this case, we find that the following are reasonable amounts of             
          compensation to Mr. Ruf for the indicated years:                            
          Year Ended          Reasonable Compensation                                 
          Feb. 28, 1987              $1,128,936                                       
          Feb. 29, 1988                 832,629                                       
          Feb. 28, 1989                 632,693                                       
          Feb. 28, 1990                 800,000                                       
          Feb. 28, 1991                 750,000                                       
          We note that in the notice, at trial, and/or on brief, respondent           
          allowed the total amounts of compensation that petitioner deduct-           
          ed in its returns for its taxable years ended Feb. 29, 1988, Feb.           
          28, 1989, and Feb. 28, 1991.  Respondent also conceded on brief             
          the $73,117 of interest petitioner deducted in its Federal income           
          tax return for its taxable year ended Feb. 28, 1989, that was               
          related to the $315,603 of compensation awarded pursuant to the             
          management agreement.  Consequently, our findings herein affect             
          petitioner's Federal income tax liability only for its taxable              
          year ended Feb. 28, 1990, and not for its taxable years ended               
          Feb. 29, 1988, Feb. 28, 1989, and Feb. 28, 1991.                            







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