- 8 - entirety, “Winona J. Mowrey, FOR SERVICES RENDERED FOR YEAR ENDED 1993 $102,955.33”. The document bears no letterhead and contains no reference to Crestmark. This purported invoice sheds little light on what services the $102,955 deposit compensated. The record is devoid of any evidence to suggest that the fees purportedly paid to Crestmark were the result of arm’s- length bargaining. There was no contract between the individual petitioners or between Mowrey and Crestmark spelling out the nature and terms of services to be provided by Boehm. The individual petitioners’ testimony on the method of compensation was vague and inconsistent. Mowrey testified that fees paid to Crestmark were based on a percentage of “less than 10 percent of total income”, and that the amount varied “on budget preparation time and that type of thing”. Boehm testified: “I charge whatever I want to.” Even assuming, arguendo, that the claimed deduction represented a reasonable allowance for services performed by Boehm, petitioners have not established that Boehm performed these services in his capacity as an employee of Crestmark, rather than in his own capacity. This consideration implicates the “first principle of income taxation: that income must be taxed to him who earns it.” Commissioner v. Culbertson, 337 U.S. 733, 739-740 (1949) (citing Lucas v. Earl, 281 U.S. 111 (1930)). Generally, a corporation constitutes a separate taxable entity and will not be ignored for Federal income tax purposes ifPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011