- 32 -
F.2d 272, 275-276 (5th Cir. 1979); Tulia Feedlot, Inc. v. United
States, 513 F.2d 800, 803-806 (5th Cir. 1975); Fong v.
Commissioner, T.C. Memo. 1984-402, affd. without published
opinion 816 F.2d 684 (9th Cir. 1987); Seminole Thriftway, Inc. v.
United States, 42 Fed. Cl. 584, 589-590 (1998) (the guaranty fee
cases).
We find no meaningful distinction between the guaranty fee
cases and this case where, instead of defending the deductibility
of amounts labeled by the payor as guaranty fees, petitioner, in
effect, seeks to treat, as guaranty fees, an unspecified portion
of an amount originally labeled by the board as “annual
compensation, including bonuses”. The same deductibility factors
should apply under either set of circumstances, with the possible
exception of the fifth factor (fees proportional to stock
ownership), which would be difficult to apply in the absence of
some way to identify the guaranty-fee portion of the payments
labeled compensation.
In this case, the shareholder-guarantors did not demand
compensation, and there is no evidence in the minutes of the
annual board meetings or elsewhere of an intent to compensate
them for the guaranties.4 It is also clear that petitioner had
4 When Mrs. Harrison executed her $7.5 million personal
guaranty of bank loans to petitioner in 1994, she neither
requested, received, nor was promised additional compensation as
consideration therefor. Moreover, her total compensation as
determined by the board of directors for 1994-97 (when her
(continued...)
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