- 6 -
a 34.93-percent industry average. For the 1991 calculation, he
again used the 1990 industry average (i.e., 32.189 percent)
rather than the 1991 industry average. In the 1990 and 1991
calculations, he used figures from a sample of printing companies
categorized according to the amount of their sales. In 1992,
however, he used figures from a sample of printing companies
categorized according to the value of their assets. In addition,
he used a chart applicable to companies with assets under $1
million when petitioner had assets in excess of that amount.
Also in 1992, petitioner incurred bad debts of $166,700. Before
adjusting Mr. Blazick's allocation, however, Mr. Rosi reduced the
bad debts figure to $112,403.
During the years in issue, petitioner paid, in the form of
cash and promissory notes, the following amounts to Messrs.
Blazick and Richter:
1990 1991 1992
Allen Blazick
Salary $155,372.00 $175,845.00 $173,372
Incentive 490,859.92 1,651,145.76 1,324,608
Total 646,231.92 1,826,990.76 1,497,980
Steven Richter
Salary $57,791.00 $64,616.00 $60,000
Incentive 98,035.62 183,460.64 149,179
Total 155,826.62 248,076.64 209,179
For each year in issue, petitioner filed a Form 1120 (U.S.
Corporation Income Tax Return) and claimed a deduction for the
compensation paid to Messrs. Blazick and Richter. Respondent, in
the notice of deficiency, disallowed $357,453 of petitioner's
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011