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establish when the $50,000 claimed for the year 1979 was paid.
CTC's 1979 disbursements journal reflects an account payable to
I.J. Zand on June 15, 1979, of $50,000. However, petitioner's
books and other evidence fail to show when or whether this
account payable to I.J. Zand was paid. Since petitioner is a
cash basis taxpayer, he may not claim a deduction for an account
payable. Sec. 461; sec. 1.461-1(a)(1), Income Tax Regs. Because
he has not shown that the $50,000 was paid in 1979, he is not
entitled to the deduction claimed.
D. Management Fees
For the years 1977, 1978, and 1979 respondent disallowed
management fees in the amounts of $96,396, $72,609, and $67,943,
respectively. For the year 1980 respondent disallowed the amount
of $106,601, which consists of payments for investment counsel
totaling $4,500 and payments for consulting and salaries totaling
$102,101.
The majority of the amounts at issue consist of alleged
payments to CDC for management fees. CDC was incorporated on
September 27, 1976. Petitioner held a controlling interest in
CDC.
For the year 1977 petitioner presented no evidence as to how
the amount of the management fee paid was determined or what
services were rendered by CDC to him in exchange for the fee.
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