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With respect to 1993, the IRS determined that the deduction
that PKV&S claimed for compensation paid to Rose should be
reduced by $1,892,852. The IRS determined this reduction by
subtracting reasonable salary for 1993 totaling $139,141 from the
officer compensation that PKV&S deducted in that year. As it did
in 1992, the IRS determined reasonable salary for 1993 by
multiplying PKV&S’s gross receipts for that year by 3 percent.
Accordingly, the IRS increased PKV&S’s taxable income by
$1,892,852 for 1993.
PK Ventures’ Share of PKVI LP’s Items of Income and Loss
A. As Reported on PK Ventures’ Schedules K-1
The following items were listed on PK Ventures’
Schedules K-1 that were attached to PKVI LP’s Forms 1065 for 1986
through 1993:
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