- 29 -
Choate awarded himself a large amount of catchup pay in 1992,
when petitioner had become successful.
Respondent contends that we should disregard Choate's
testimony because it was self-serving. We disagree. Choate's
testimony was plausible and consistent with the objective
evidence. Respondent offered no evidence to contradict Choate's
testimony that petitioner intended to pay him catchup pay.
Reynolds corroborated Choate's testimony.
Respondent points out that cases permitting catchup pay
because of past undercompensation usually involve a substantial
base period. See Lucas v. Ox Fibre Brush Co., supra (14 years);
R.J. Nicoll Co. v. Commissioner, supra (13 years); Acme Constr.
Co. v. Commissioner, T.C. Memo. 1995-6 (7 years); Comtec Systems,
Inc. v. Commissioner, T.C. Memo. 1995-4 (12 years). Respondent
concludes from this that a deduction for catchup pay is not
available in a company's third year. We disagree. If a taxpayer
otherwise qualifies, it may deduct catchup pay. The fact that
petitioner could provide catchup pay quickly is another measure
of Choate's success.
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011