- 10 -
paid the following construction expenses during the taxable
periods at issue:
Taxable Periods Construction Expenses
Ending Paid by Petitioner
3/31/85 $25,362
3/31/86 495,498*
5/31/86 103,941
* Petitioner paid for other construction expenses.
Because Atkinson reimbursed petitioner for those
other construction expenses, those amounts are
not included in the $495,498.
On its books, petitioner listed the construction expenses as
corporate expenses. Because the construction expenses were
listed on petitioner’s books as corporate expenses, Dunkin’s
staff deducted the construction expenses on petitioner’s
corporate tax returns. The deductions claimed for the
construction expenses were classified mostly as cost of goods
sold. The construction expenses were not classified as
compensation on petitioner’s books or corporate tax returns.
On its corporate tax returns, petitioner reported the
following compensation deductions for Atkinson’s services and
dividends declared to Atkinson for the taxable periods at issue:
Taxable Period Atkinson’s Dividends
Ending Compensation Declared
3/31/85 $558,000 $4,980
3/31/86 532,975 4,980
5/31/86 35,530 -0-
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Last modified: May 25, 2011