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circumstances. Sec. 1.162-7(b)(3), Income Tax Regs. Reasonable
and true compensation is only such amount as would ordinarily be
paid for like services by like enterprises under like
circumstances. Id.
Whether an expense that is claimed pursuant to section
162(a)(1) is reasonable compensation for services rendered is a
question of fact that must be decided on the basis of the
particular facts and circumstances. Paula Constr. Co. v.
Commissioner, 58 T.C. 1055, 1058-1059 (1972), affd. without
published opinion 474 F.2d 1345 (5th Cir. 1973); see also Pepsi-
Cola Bottling Co. of Salina, Inc. v. Commissioner, 528 F.2d 176,
179 (10th Cir. 1975), affg. 61 T.C. 564 (1974); Pac. Grains, Inc.
v. Commissioner, 399 F.2d 603, 605 (9th Cir. 1968), affg. T.C.
Memo. 1967-7. There are no fixed rules or exact standards for
determining what constitutes reasonable compensation. Golden
Constr. Co. v. Commissioner, 228 F.2d 637, 638 (10th Cir. 1955),
affg. T.C. Memo. 1954-221. When the case involves a closely held
corporation with the controlling shareholders setting their own
level of compensation as employees, the reasonableness of the
compensation is subject to close scrutiny. Owensby & Kritikos,
Inc. v. Commissioner, 819 F.2d 1315, 1324 (5th Cir. 1987), affg.
T.C. Memo. 1985-267; see also Tulia Feedlot, Inc. v. United
States, 513 F.2d at 805; Golden Constr. Co. v. Commissioner,
supra at 638.
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