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Unemployment Tax Act (FUTA) taxes, see secs. 3111(a) and (b)(6),
3301, as well as the employer’s share of State employment and
unemployment taxes. Such taxes are deductible when paid in
carrying on the employer’s trade or business. Sec. 162(a).
Although we cannot precisely ascertain from the record the exact
amount of FICA and FUTA taxes paid by petitioner, we shall apply
the Cohan rule and allow deductions for the employer’s share of
FICA and FUTA taxes, calculated on the wages that we have held
are deductible in each of the years at issue. The following
rates were in effect with respect to FICA (old-age, survivors,
and disability insurance (sec. 3111(a)) and hospital insurance
(sec. 3111(b)(6))), and FUTA (sec. 3301) for each of the years at
issue:
Year FICA FUTA
Old Age Hospital
1987 5.7 percent 1.45 percent 6 percent
1988 6.06 percent 1.45 percent 6.2 percent
1989 6.06 percent 1.45 percent 6.2 percent
1990 6.2 percent 1.45 percent 6.2 percent
Applying these rates to the wages allowed as deductions in each
of the years at issue results in deductions for the employer’s
share of FICA and FUTA tax of $1,839.82 for 1987, $2,632.74 for
1988, $3,597.23 for 1989,19 and $4,023.98 for 1990.
19Respondent already has conceded that $2,324.64 of this
amount is deductible. We have calculated the amount allowed as a
deduction for 1989 to eliminate any duplication.
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