- 79 -
Commissioner, supra at 443; see also Loftin & Woodard, Inc. v.
United States, supra at 1214-1215; Crosby v. United States, supra
at 1388; Magnon v. Commissioner, 73 T.C. 980, 993-994 (1980).
Petitioners argue that the excess contributions were paid to
the employee/owners as compensation for their services. We
disagree. Whether amounts are paid as compensation turns on the
factual determination of whether the payor intends at the time
that the payment is made to compensate the recipient for services
performed. See Whitcomb v. Commissioner, 733 F.2d 191, 194 (1st
Cir. 1984), affg. 81 T.C. 505 (1983); King’s Ct. Mobile Home
Park, Inc. v. Commissioner, 98 T.C. 511, 514-515 (1992); Paula
Constr. Co. v. Commissioner, 58 T.C. 1055, 1058-1059 (1972),
affd. without published opinion 474 F.2d 1345 (5th Cir. 1973).
The intent is not found, as petitioners would have it, at or
after the time that respondent challenges the payment’s
characterization as something other than compensation. See
King’s Ct. Mobile Home Park, Inc. v. Commissioner, supra at 514;
Paula Constr. Co. v. Commissioner, supra at 1059-1060; Joyce v.
Commissioner, 42 T.C. 628, 636 (1964); Drager v. Commissioner,
T.C. Memo. 1987-483. The mere fact that petitioners now choose
32(...continued)
dividend treatment. Nor is it precluded because the corporations
did not formally distribute the cash directly to the
owner/employees. See Loftin & Woodard, Inc. v. United States,
577 F.2d 1206, 1214 (5th Cir. 1978); Crosby v. United States, 496
F.2d 1384, 1388 (5th Cir. 1974).
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