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$2,031,993 was attributable to current compensation and what part
(if any) was attributable to deferred compensation.
Rose, as sole director of PK Ventures, determined the
amounts of compensation that PK Ventures paid to him during the
years in issue. With respect to the $4,460,000 of “deferred
compensation” that was recorded in PK Ventures’ general ledger
for 1992, Rose first determined this amount sometime between the
beginning of 1992 and March 30, 1992. Included in the
determination of the $4,460,000 was the amount of compensation
that Rose believed that he should have received from Zephyr
during a 16-month period in 1987 and 1988. There had never been
an amount accrued as a salary for Rose on Zephyr’s books and
records, and PK Ventures had never been a shareholder of Zephyr.
Furthermore, the total compensation that Rose determined that
PK Ventures should pay him for 1992 and 1993 related to his
providing services over an “8.3-year” period that included a
portion of 1985 and the entirety of 1986 through 1993.
C. Wages Reported on Income Tax Returns
PK Ventures deducted the following amounts as compensation
paid to officers and salaries and wages paid on its income tax
return for 1986, and PKV&S deducted the following amounts as
compensation paid to officers and salaries and wages paid on its
consolidated income tax returns for 1987 through 1993:
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