Gerald E. Johnson and Dorothy Johnson - Page 8

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          Johnson as an officer of that company10 and that it did not pay             
          any compensation to Ms. Johnson as an officer.  In that return,             
          G.E. Johnson, Inc., reported that it paid $38,082 of salaries and           
          wages, although it did not identify in that return the person or            
          persons to whom it paid those wages.  In G.E. Johnson, Inc.’s               
          1993 return, G.E. Johnson, Inc., reported that it paid $145,628             
          in rent, although it did not specify in that return the amount of           
          such rent that it paid to petitioners during its taxable year               
          ended October 31, 1993.                                                     
               In G.E. Johnson, Inc.’s 1994 return, G.E. Johnson, Inc.,               
          reported that it paid $1,000 of compensation to Mr. Johnson as an           
          officer of that company and that it did not pay any compensation            
          to Ms. Johnson as an officer.  In that return, G.E. Johnson,                
          Inc., reported that it paid $43,544 of salaries and wages,                  
          although it did not identify in that return the person or persons           
          to whom it paid those wages.  In G.E. Johnson, Inc.’s 1994                  
          return, G.E. Johnson, Inc., reported that it paid $122,014 in               
          rent, although it did not specify in that return the amount of              
          such rent that it paid to petitioners during its taxable year               
          ended October 31, 1994.                                                     

               10As discussed above, petitioners’ 1993 return did not                 
          report any wages or other compensation received from G.E. John-             
          son, Inc.  Although not clear from the record, we presume that              
          G.E. Johnson, Inc., paid to Mr. Johnson sometime during the last            
          two months of 1992 the $20,000 of compensation that it reported             
          it paid to him as an officer during its taxable year ended Oct.             
          31, 1993.                                                                   





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