Max Burton Enterprises, Inc. - Page 11

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               Under certain circumstances, prior services may be                     
          compensated in a later year.  Lucas v. Ox Fibre Brush Co., 281              
          U.S. 115 (1930); American Foundry v. Commissioner, 59 T.C. 231,             
          239 (1972), affd. in part and revd. in part 536 F.2d 289 (9th               
          Cir. 1976).  However, in such instances, the taxpayer must                  
          establish that there was not sufficient compensation in the prior           
          periods and that, in fact, the current year’s compensation was to           
          compensate for that underpayment.  Estate of Wallace v.                     
          Commissioner, 95 T.C. 525, 553-554 (1990), affd. on another                 
          ground 965 F.2d 1038 (11th Cir. 1992).                                      
               The cases contain a lengthy list of factors that are                   
          relevant in the determination of reasonableness, including:  The            
          employee’s qualifications; the nature, extent, and scope of the             
          employee’s work; the size and complexities of the business; a               
          comparison of salaries paid with gross income and net income; the           
          prevailing general economic conditions; a comparison of salaries            
          with distributions to stockholders; the prevailing rates of                 
          compensation for comparable positions in comparable concerns; the           
          salary policy of the taxpayer as to all employees; and the amount           
          of compensation paid to the particular employee in previous                 
          years.  Mayson Manufacturing Co. v. Commissioner, 178 F.2d 115              
          (6th Cir. 1949), affg. a Memorandum Opinion of this Court; see              
          also Commercial Iron Works v. Commissioner, 166 F.2d 221, 224               
          (5th Cir. 1948).  In Elliotts, Inc. v. Commissioner, 716 F.2d               

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