John L. Ginger Masonry, Inc. - Page 2

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                    FYE                                                               
          June 30                Deficiency                                           
               1990                   $227,677                                        
               1991                   52,981                                          
          1992                     72,081                                             
               The issue for decision is whether the compensation paid to             
          petitioner's shareholder in its fiscal years ending 1990 and 1992           
          is deductible by petitioner as reasonable compensation under                
          section 162(a)(1).  We hold that it is.                                     
               All section references are to the Internal Revenue Code in             
          effect for the years in issue, and all Rule references are to the           
          Tax Court Rules of Practice and Procedure, unless otherwise                 
          indicated.                                                                  
                                  FINDINGS OF FACT                                    
               We incorporate by reference the stipulation of facts and               
          attached exhibits.  John L. Ginger Masonry, Inc. (petitioner), is           
          a California corporation whose principal place of business was in           
          Riverside, California, when the petition was filed.  Petitioner             
          operates on a fiscal year ending June 30.  The deficiency                   
          determined by respondent for the fiscal year ended June 30, 1991,           
          stems solely from adjustments tied to the fiscal years ended June           
          30, 1990, and June 30, 1992.                                                
          A. Petitioner                                                               
               Petitioner is a masonry contractor that specializes in                 
          brick, stone, and block masonry.  Petitioner's founder, John L.             
          Ginger (Ginger), has spent his entire career in the construction            




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