- 5 -
In addition, petitioner reported the following expenses under
"Other Deductions":
Year Item Amount
1987 Sec. 401(k) bonuses $30,000.00
1989 Commission expenses 75,000.00
1990 Bonuses 60,000.00
1991 Commissions 41,660.28
Bonuses 55,000.00
For the calendar years 1986 and 1987, Mr. Clendenen filed
joint U.S. Individual Income Tax Returns. For 1988 through 1991,
he filed his returns with a filing status of single.2 Mr.
Clendenen's returns reflect the following:
Wages, Business
Year Salaries Income Type of Business
1986 $12,938 0
1987 30,000 0
1988 0 0
1989 0 $75,000 Insurance consulting
1990 0 60,000 Consultant
1991 0 55,000 Consultant
For the plan year ending June 30, 1986, and his taxable year
ending December 31, 1986, Mr. Clendenen treated $17,029.38 as an
elective deferral of compensation into the ESOP.
Discussion
Section 401(a)(16) provides:
A trust shall not constitute a qualified trust under
this section if the plan of which such trust is a part
2 Mr. Clendenen was divorced on Jan. 11, 1988.
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