- 24 -
We also believe it critical that petitioner had the funds to
pay Mr. Ashare the $1,750,000. Petitioner did not pay Mr. Ashare
the $1,750,000 by way of a debt instrument such as a promissory
note. Petitioner used funds which it was able to raise through a
liquidation of assets, most of which were obtained on account of
the efforts of Mr. Ashare, and through one or more loans. The
fact that Mr. Ashare is the one who lent the funds to petitioner
is of no consequence. It is a legitimate managerial function to
ascertain the amount of employee compensation that will be paid
in a year, and, absent abuse, which is not present here, we
decline to second-guess management's decision on the amount and
timing of that compensation or on the manner in which management
goes about obtaining the underlying funds.
We hold that petitioner may deduct the $1,750,000 payment to
Mr. Ashare as reasonable compensation. In so holding, we have
considered all arguments made by the parties and, to the extent
not discussed above, find them to be without merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Last modified: May 25, 2011