E.J. Harrison and Sons, Inc. - Page 5

                                        - 5 -                                         
          i.e., for each of the audit years.1  The members of the board               
          also met informally each week to discuss company business.                  
               Under petitioner’s bylaws, each director has an equal vote;            
          no director has veto power over a decision by a majority of the             
          board.  Nevertheless, in practice, with respect to major                    
          decisions (e.g., approval of trash hauling contracts, major                 
          equipment purchases, or large borrowings), the board acted by               
          consensus; i.e., unanimous agreement.                                       
          Duties of Officers                                                          
               Mrs. Harrison                                                          
               In the early years of the business, Mrs. Harrison kept                 
          petitioner’s financial books and maintained the “route books”,              
          which determined the routes for the trash pickup trucks.  Her               
          duties consisted primarily of keeping track of customers,                   
          collecting payments, and depositing collections.  After her three           
          sons joined the business in the early 1960s, Mrs. Harrison                  
          continued to keep “the books”, basically keeping track of                   
          payments and collections.  She also paid certain of the bills and           
          attended contract negotiation meetings with Mr. Harrison.                   



               1  We note that petitioner, an accrual basis taxpayer, would           
          appear to be prohibited from deducting, in any taxable year,                
          compensation that is not fixed or determinable until after the              
          close of that taxable year.  See sec. 1.461-1(a)(2), Income Tax             
          Regs.  Because respondent has not raised, as an issue, the proper           
          accrual of officer compensation, we do not address it.                      





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