Damron Auto Parts, Inc. - Page 10




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               Respondent contends that petitioner did not pay Mr. Damron             
          to make up for past undercompensation because he had signed the             
          Verification.  We conclude that the Verification is irrelevant              
          and that it did not preclude petitioner from paying for past                
          services.  See Lucas v. Ox Fibre Brush Co., 281 U.S. 115, 119               
          (1930) (stating that “compensation for past services, it being              
          admitted that it was reasonable in amount in view of the large              
          benefits which the corporation had received as the fruits of                
          these services, the corporation had a right to pay, if it saw               
          fit”).  Even if portions were not attributable to past services,            
          our conclusion would not change.                                            
               Accordingly, we hold that Mr. Damron’s salary during the               
          years in issue was reasonable.                                              
          II.  Additions to Tax                                                       
               Section 6651(a)(1) imposes an addition to tax for failure to           
          file a required return on the date prescribed, unless it is shown           
          that such failure is due to reasonable cause and not willful                
          neglect.  Petitioner’s 1993 and 1994 returns were due on July 15,           
          1994, and July 17, 1995, but not filed before November 18, 1994,            
          and August 2, 1995, respectively.  Petitioner presented no                  
          evidence relating to this issue and did not address it on brief.            
          It has not been shown that such failure is due to reasonable                
          cause and not willful neglect.  Accordingly, petitioner is liable           
          for the section 6651(a)(1) additions to tax.                                






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