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Entity 1986-89 1990 1991
PK Ventures $170,000 $98,068 $67,469
SLPC -- 45,000 --
TBPC –- 120,000 60,000
TPTC -- 120,000 60,000
Total 170,000 383,068 187,469
In sum, Rose received $740,537 for his services to PK Ventures
and its subsidiaries during these years.
With respect to 1992, the IRS determined that the deduction
that PKV&S claimed for compensation paid to Rose should be
reduced by $1,208,893. The IRS determined this reduction by
subtracting (1) reasonable salary for 1992 totaling $143,317 and
(2) deferred compensation totaling $294,738 from the $1,646,948
that PKV&S deducted in that year. The IRS determined the
reasonable salary for 1992 by multiplying PKV&S’s gross receipts
for that year by 3 percent. The IRS determined deferred
compensation as follows:
Salary
Deducted on Reasonable Deferred
Year Return Salary Difference Compensation
1987 -– $91,634 ($91,634) $91,634
1988 -– 120,800 (120,800) 120,800
1989 $170,000 133,739 36,261 (36,261)
1990 50,068 159,024 (108,956) 108,956
1991 140,469 150,078 (9,609) 9,609
Total 360,537 655,275 (294,738) 294,738
As it did in 1992, the IRS determined reasonable salary for 1987
through 1991 by multiplying PKV&S’s gross receipts for each of
those years by 3 percent. Accordingly, the IRS increased PKV&S’s
taxable income by $1,208,893 for 1992.
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