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corporation intended the disallowed corporate payments to be
compensation to petitioner when they were made. Paula Constr.
Co. v. Commissioner, supra at 1059. Moreover, we decide the case
in light of what was done, not what might have been done. Id. at
1060 (and cases cited therein).
The record in the instant case lacks any credible evidence
of the corporation's intent to treat the disallowed corporate
payments as compensation for petitioner's services when the
payments were made. For the taxable years in issue, the
corporation characterized certain amounts other than the
disallowed corporate payments on its Federal income tax returns
and petitioner's Forms W-2 as compensation to petitioner, which
compensation was included as compensation income on petitioners'
Federal income tax returns. However, neither books or records of
the corporation nor testimony were offered to establish that the
corporation intended to treat the disallowed corporate payments
as compensation for petitioner's services. Moreover, the
disallowed corporate payments were not characterized as payments
of compensation to petitioner on the corporation's Federal income
tax returns or on the Forms W-2 that it furnished to petitioner.
Finally, the disallowed corporate payments were not reported as
income on petitioners' Federal income tax returns. Based on the
record in the instant case, we are not persuaded that the
corporation intended to treat the disallowed corporate payments
as compensation for petitioner's services when the payments were
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