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Respondent disallowed as unreasonable compensation under
section 162(a)(1)1 $353,911 of salaries out of $1,113,800 paid
and claimed by petitioner as salaries and bonuses to its officer-
director-shareholders, William and Connie Myers, for its fiscal
year ended July 31, 1996. We sustain respondent’s determination.
FINDINGS OF FACT
Some of the facts have been stipulated and are found
accordingly. The stipulation of facts and accompanying exhibits
are incorporated by this reference.
Petitioner is a Colorado corporation that pours concrete
foundations of residential houses and light commercial buildings
for real property developers, and provides other concrete “flat
work”, such as driveways, sidewalks, and basement and garage
floors. When petitioner filed its petition, it maintained its
principal place of business in Colorado. At all relevant times,
petitioner has been taxable as a C corporation and reported its
income and deductions, except for State income tax, on the cash
method of accounting.
1All section references are to the Internal Revenue Code as
in effect during the years in issue, and all Rule references are
to the Tax Court’s Rules of Practice and Procedure. The
deficiency for the fiscal year ended July 31, 1993, is
attributable to the reduction of a net operating loss carryback
(claimed by petitioner from the fiscal year ended July 31, 1996)
by reason of respondent’s disallowance of a portion of the
compensation deduction claimed by petitioner for the later year.
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