Wy'East Color, Inc. An Oregon Corporation - Page 25

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          of gross sales for 1989 and 1990); and Comtec Sys., Inc. v.                 
          Commissioner, T.C. Memo. 1995-4 (compensation was 28.1 percent of           
          gross sales for Vernon Beard and 2.3 percent for Reda Beard).  We           
          disagree with petitioner's reliance on those cases.  We did not             
          calculate or consider compensation as a percent of gross sales or           
          gross receipts in any of these cases except for BOCA Constr.,               
          Inc. v. Commissioner, supra.  We calculated those percentages               
          based on facts found in those cases.  In those cases, we                    
          considered compensation as a percent of net sales, net profit, or           
          gross profit, but not compensation as a percent of gross sales.             
          RAPCO, Inc. v. Commissioner, supra; Donald Palmer Co. v.                    
          Commissioner, supra; Acme Constr. Co. v. Commissioner, supra; and           
          Comtec Sys., Inc. v. Commissioner, supra.                                   
               In Donald Palmer Co. v. Commissioner, supra, we concluded              
          that a salary equal to 58.2 percent of gross profit was                     
          reasonable because that percentage was similar to what the                  
          taxpayer had paid in prior years.  Here, we have no evidence of             
          management fees as a percent of gross profit that petitioner paid           
          in prior years.  Acme Constr. Co. v. Commissioner, supra, and               
          Comtec Sys., Inc. v. Commissioner, supra, are unlike this case              
          because some pay during the years in issue in those cases was               
          catchup pay for prior years.  Acme Constr. Co. v. Commissioner,             
          supra, is unlike this case because the executive there personally           
          guaranteed all of the taxpayer's debt.  The taxpayers in Acme               





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