- 4 - shareholder. Petitioner provided minimal services for CTC in FYE May 31, 1996. During FYE May 31, 1996, petitioner provided the following marketing and advertising services for VVI: Photographed models and VVI products, sponsored pro and semipro athletes, sponsored various sporting events,4 negotiated with retail stores and distributors to sell VVI’s products, including developing and distributing advertising displays and posters to these stores, and promoted VVI’s traveling trade shows. D. Petitioner’s Financial Condition and Employee Compensation On its Form 1120, U.S. Corporation Income Tax Return, for FYE May 31, 1996, petitioner reported gross receipts of $1,055,433, with total income of $1,143,468.5 After petitioner deducted a $500,000 bonus and a $9,000 salary as executive compensation to Mr. Reeves, $31,757 as salary and wages to its employees, $113,369 for a supplies business expense, and $426,963 in various other deductions, petitioner’s taxable income was $62,379 with a total tax of $21,2096 and a net income book value 4 Sporting events included volleyball and waterskiing competitions. 5 Total income included gross rents of $67,347 and gross royalties of $20,688. 6 The total tax due included an estimated tax penalty of $1,029.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 NextLast modified: November 10, 2007