Menard, Inc. - Page 1


                                   130 T.C. No. 4                                     

                               UNITED STATES TAX COURT                                

                             MENARD, INC., Petitioner v.                              
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      
                           JOHN R. MENARD, Petitioner v.                              
                  COMMISSIONER OF THE INTERNAL REVENUE, Respondent*                   

               Docket Nos. 673-02, 674-02.     Filed February 19, 2008.               

                    MI is an accrual basis taxpayer with a fiscal year                
               ending Jan. 31.  S is a cash basis taxpayer who was the                
               president, CEO, and 89-percent shareholder of MI during                
               MI’s TYE 1998.                                                         
                    In an earlier opinion, the Court concluded that a                 
               portion of the compensation that MI paid to S during                   
               TYE 1998 was unreasonable and represented a disguised                  
               dividend, and consequently MI was liable for an income                 
               tax deficiency to the extent S’s compensation was not                  
               deductible as an ordinary and necessary business                       

               *This Opinion supplements our previously filed opinions in             
          Menard, Inc. v. Commissioner, T.C. Memo. 2004-207, and Menard,              
          Inc. v. Commissioner, T.C. Memo. 2005-3.                                    

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Last modified: March 27, 2008