-14-
for services actually rendered by the employees. Sec. 1.162-9,
Income Tax Regs. Ms. Cunningham was a Cirtex employee and rendered
services to the company, not to petitioners. Although petitioners
were corporate officers, their personal payment of an employee
bonus would not be an ordinary and necessary expense of their
office. See Grossman v. Commissioner, T.C. Memo. 1974-269.
Further, petitioners received stock from Ms. Cunningham in exchange
for their $1,600 payment. Accordingly, we hold that petitioners
may not deduct the cost of the stock purchase.
Issue 6. Solectron Stock Basis
On their 1989 return, petitioners reported a $10,000 basis in
their Solectron stock. They now contend that their basis in the
Solectron stock, which Mr. Yei sold for $99,990 in 1989, should be
increased from $10,000 to $29,000 to reflect $19,000 in payments
petitioners made to family members. As best we can understand
petitioners' position, they claim that Mr. Yei's father in effect
owned the Solectron stock because he loaned the money for its
purchase to petitioners. They further claim that the $19,000 in
payments to family members represents part of the cost of their
debt to Mr. Yei's father. Respondent takes the position that the
basis of petitioners' stock remains $10,000, as reported on
petitioners' tax return.
There is no question but that the cost of the stock is
$10,000. The stock was issued to Mr. Yei, and he used the stock to
secure a lease on the building Cirtex used. Mr. Yei's father did
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