- 48 -
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.
Page: Previous 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 NextLast modified: May 25, 2011