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Halvor N. Adams III and Thomas J Kerrigan, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: Pulsar Components International, Inc.,
petitioned the Court to redetermine respondent's determination of
a $382,771 deficiency in its income tax for its taxable year
ended July 31, 1985. Respondent determined that $822,000 of the
$2,922,000 claimed by petitioner as officers' compensation was
unreasonable. In an amendment to her answer, respondent asserted
that $2,324,170 of the claimed compensation was unreasonable,
increasing the claimed deficiency to $1,089,369. Respondent also
asserted in the amendment that petitioner was liable for an
addition to tax under section 6661.
We must decide the amount of compensation paid by petitioner
that is reasonable and thus deductible as a business expense
under section 162. We hold all of it is.1 Unless otherwise
stated, section references are to the Internal Revenue Code in
effect for the year in issue. Rule references are to the Tax
Court Rules of Practice and Procedure. We separately refer to
Thomas F. Laviano and Peter T. Woll as Mr. Laviano and Mr. Woll,
respectively. We collectively refer to them as the Officers.
FINDINGS OF FACT
1 Accordingly, we also hold that petitioner is not liable
for the addition to tax asserted by respondent.
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