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V. Returns
On July 15, 1994, and July 17, 1995, petitioner’s respective
1993 and 1994 returns were due (i.e., after extensions). On
November 18, 1994, and August 2, 1995, respondent received the
respective 1993 and 1994 returns. Respondent determined that Mr.
Damron’s compensation should be adjusted as follows:
Year Amount Allowed Adjustment
1993 $468,946 $881,054
1994 492,373 1,344,741
1995 517,004 1,385,532
OPINION
I. Compensation
Section 162(a) allows a deduction for salary expense if the
amount is reasonable and the expense relates to compensation for
services actually rendered. Elliotts, Inc. v. Commissioner, 716
F.2d 1241, 1243 (9th Cir. 1983), revg. T.C. Memo. 1980-282. An
expense “may be deductible as reasonable compensation for current
and past services rendered.” R. J. Nicoll Co. v. Commissioner,
59 T.C. 37, 50 (1972).
We note at the outset that 10 percent of the compensation
paid, during the years in issue, to Mr. Damron, was directly
attributable to services performed for the nine other
corporations he controlled. These amounts should have been paid
by such corporations and, accordingly, are not deductible by
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