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Petitioner has failed to establish that it followed proper
formalities entitling Doyce Gentry or his sons to withdraw any
compensation prior to the end of petitioner’s fiscal year. Like
the taxpayers in Jerome Castree Interiors, Inc. v. Commissioner,
supra, and Lacy Contracting Co. v. Commissioner, supra,
petitioner had not formally allocated the compensation between
Mr. Gentry and his sons by the end of petitioner’s fiscal year.
Moreover, petitioner’s case is much weaker than were the
taxpayers’ cases in Jerome Castree Interiors, Inc. and Lacy
Contracing Co. Not only did petitioner fail formally to
allocate the compensation between Mr. Gentry and his sons by the
end of petitioner’s fiscal year, petitioner did not even
authorize the total unallocated amount of compensation through
proper corporate procedures by the end of its fiscal year.
Petitioner attempts to distinguish Jerome Castree
Interiors, Inc. because the bonuses there had to be allocated
between five shareholders, while in the case at hand the
compensation only had to be allocated between one shareholder
and two employees. This distinction makes no difference. To
actuate constructive receipt, a specific amount must be
“credited to his account, set apart for him, or otherwise made
available so that he may draw upon it at any time”. Sec. 1.451-
2(a), Income Tax Regs. It does not matter what ownership or
corporate positions are held by the potential recipients of the
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