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making important decisions for petitioner. Chasin, Hanson, and
Searing never had a written employment contract with petitioner.
During the year in issue, petitioner paid salaries of $108,575 to
Chasin, $131,360 to Hanson, and $131,360 to Searing. Petitioner
had a retirement plan for its nonunion employees including
Chasin, Hanson, and Searing. Petitioner contributed $30,000 to
its retirement plan in the year in issue for each of its three
shareholders.
Each of the three shareholders had authority to sign
petitioner's checks during the year in issue without having them
cosigned by another shareholder. Chasin, Hanson, and Searing
reported their income and expenses on a calendar year basis and
used the cash method of accounting.
Petitioner had a $50,000 group term life insurance policy
for each shareholder.
5. Summit Supply Co. and North County Builders
Chasin, Hanson, and Searing were equal partners of Summit
Supply Co., a California general partnership, in 1986 and 1987.
Summit Supply Co. bought, developed, and sold real estate.
Summit Supply Co. did not pay Chasin, Hanson, or Searing for
their services to Summit Supply Co., which consisted of helping
to buy, develop, and sell real estate. Chasin, Hanson, and
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