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Return Financial Statement
Total Officer Total Officer
Year Dennis Curtis Compensation Compensation
1986 $134,310 $60,690 $195,000 $195,000
1987 40,641 40,641 81,282 81,282
1988 74,206 51,706 125,912 285,912
1989 160,456 80,456 240,912 243,090
1990 207,239 97,239 304,478 304,478
1991 745,050 345,050 1,090,100 930,100
1992 593,350 193,350 786,700 788,400
1993 784,470 204,450 988,920 988,920
1994 847,109 399,260 1,246,369 1,246,437
1995 1,048,200 246,688 1,294,888 1,293,948
1996 699,192 400,573 1,099,765 1,099,825
Since its incorporation in 1985, petitioner has neither paid
nor declared any dividends.
Petitioner timely filed its Forms 1120 for the taxable years
1995 and 1996 with the Internal Revenue Service Center at Kansas
City, Missouri. On November 25, 1998, respondent issued a notice
of deficiency to petitioner for the taxable years ending October
31, 1995 and 1996. Respondent's proposed adjustments concerned
only the reasonableness of petitioner's total officer
compensation payments made to Dennis and Curtis.
OPINION
A. Positions of the Parties
On its Forms 1120, petitioner deducted officer compensation
of $1,294,888 ($1,048,200 for Dennis and $246,688 for Curtis) in
1995 and $1,099,765 ($699,192 for Dennis and $400,573 for Curtis)
in 1996. Petitioner contends that the amounts paid to Dennis and
Curtis were reasonable and were for services they provided to
petitioner.
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