Law Offices--Richard Ashare, P.C. - Page 18

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          or employee may actually be an examination of the corporation's             
          books because of the inextricable identity between them or                  
          because examination of the individual's books serves as a                   
          subterfuge for examining the corporation's books; e.g., where the           
          separate accounts are all maintained in the same volume.  Compare           
          Reineman v. United States, 301 F.2d 267 (7th Cir. 1962), and                
          Application of Leonardo, 208 F. Supp. 124 (N.D. Cal. 1962), with            
          Hall v. Commissioner, 50 T.C. at 201-202, and United States                 
          Holding Co. v. Commissioner, 44 T.C. 323, 327-328 (1965).  The              
          record at hand, however, lacks the requisite evidentiary                    
          foundation to persuade us that any examination of Mr. Ashare's              
          books of account was a subterfuge for examining petitioner's                
          books.  The record merely suggests that the revenue agent simply            
          did what he purported to do; namely, gather information on the              
          potential personal income tax liability of Mr. Ashare, a taxpayer           
          who, although related to petitioner, is separate and distinct               
          from it.  See United States Holding Co. v. Commissioner, supra.             
               We turn to the primary issue; namely, whether section 162(a)           
          allows petitioner to deduct the $1,750,000 paid to Mr. Ashare as            
          compensation.  A payment of compensation is deductible under that           
          section if it is reasonable in amount and for services actually             
          rendered to the payor in or before the year of payment.  See sec.           
          162(a)(1); Lucas v. Ox Fibre Brush Co., 281 U.S. 115, 119 (1930);           
          Alpha Med., Inc. v. Commissioner, 172 F.3d 942, 945 (6th Cir.               

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