- 15 - president of Myers Foundations. On July 31, 1996, Mr. Myers’ stock interest in Myers Foundations was redeemed, and Kurt became its sole shareholder. Mr. Myers also helped Bill Collins, a former employee of petitioner and the B & D partnership, establish Collins Concrete Construction, Inc. (Collins Concrete), another foundation and flat work construction company. Mr. Collins and Mr. Myers together owned Collins Concrete. By 1996, Mr. Myers’ entire stock interest in Collins Concrete had been redeemed. During 1996, Mr. Myers also engaged in certain cattle breeding and feeding activities and horse breeding and showing activities. In the notice of deficiency, respondent disallowed petitioner’s deduction of $353,911 of the $875,000 of salaries paid Mr. Myers and Mrs. Myers for its fiscal year ended July 31, 1996, but did not make any adjustment to the $238,000 of bonuses paid for that year and the preceding year. The notice of deficiency stated, in pertinent part: Issue A: Whether the compensation paid to the shareholder/officers of the corporation are reasonable given the duties and services provided to the company. Reconciliation: FYE 7/31/96 Per Return [$]1,113,800 Per Exam 759,889 Adjustment 353,911 The total “reasonable” compensation amount was determined as follows:Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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