- 17 -
published opinion 496 F.2d 876 (5th Cir. 1974); Dobbe v.
Commissioner, T.C. Memo. 2000-330; St. John v. Commissioner, T.C.
Memo. 1970-238. One such pertinent circumstance is whether the
employer reported the amounts as wages or compensation on income
tax returns or Forms W-2, Wage and Tax Statement, and deducted
withholding therefrom. See Paula Constr. Co. v. Commissioner, 58
T.C. 1055, 1059 (1972), affd. without published opinion 474 F.2d
1345 (5th Cir. 1973); Electric & Neon, Inc. v. Commissioner,
supra at 1340-1341. However, contrary to respondent’s apparent
position, failure to do so is not conclusive. See Danz v.
Commissioner, 18 T.C. at 464; Dobbe v. Commissioner, supra.
For instance, in Danz v. Commissioner, supra at 460, the
taxpayer designated the payments at issue as “Christmas gifts to
employees”, and the Commissioner determined that they were not
deductible as compensation. Given these facts, we held:
The Commissioner erred in disallowing the amounts
paid by the trust as Christmas bonuses to employees for
1943, 1944, 1945, and 1946. Those represented amounts
ranging from $5 to $35 determined by the manager of the
hotel to be suitable bonuses for various employees of
the hotel, and a bonus to the manager ranging from $50
to $150 per year fixed by the real estate company as
agent for the trust in the operation of the hotel. The
determination of the Commissioner indicates that they
were disallowed not because in excess of reasonable
compensation for the employees but because the trust
had not deducted withholding or social security taxes
from the amounts paid * * * [Id. at 464.]
Likewise, in Dobbe v. Commissioner, supra, the company
purchased golf clubs for an overseas salesman/broker, did not
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011