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CDC was also a 70 percent partner in Green Prairie Partnership,
whose principal asset was a farm in Alabama; and CDC was a 50-
percent partner in Franklin Green Partnership whose principal
assets were buildings on the Bowling Green Farm (another farm
partnership). Petitioner and Clem Meier each held a 25-percent
partnership interest in the Franklin Green Partnership.
Petitioner claimed a CDC management fee expense on his 1977
Federal income tax return in the amount of $96,396. There is no
evidence showing either how this amount was determined or what
services CDC rendered to petitioner for this fee. Furthermore,
Mr. Dutton, petitioner's 1977 return preparer, could not confirm
that a disbursement on June 22, 1977, in the amount of $100,000
to CDC was for a management fee or for any other specific
services. Therefore, the claimed management fee deduction of
$96,396 neither is an ordinary and necessary business expense of
petitioner nor was paid.
The CDC management fee expense claimed for the year 1978 in
the amount of $72,609 consists of wages, payroll taxes on wages,
a management fee equal to 10 percent of the wage expense, and
rent, less a rent credit. There is nothing in the record to show
that the purpose of the wage expense percentage was a management
fee. Furthermore, instead of reporting the rent credit (the rent
expense of CDC to petitioner) on his 1978 Federal income tax
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