Paula Constr. Co. v. Commissioner
United States Tax Court
1. P had its status as a subch. S corporation involuntarily terminated for the years 1965 and 1966. During such years, P made distributions to its stockholders, but no amounts were treated by P or the stockholders as payments of compensation. Two of its stockholder-officers performed substantial and valuable services in prior years for which no compensation was received.
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1. P had its status as a subch. S corporation involuntarily terminated for the years 1965 and 1966. During such years, P made distributions to its stockholders, but no amounts were treated by P or the stockholders as payments of compensation. Two of its stockholder-officers performed substantial and valuable services in prior years for which no compensation was received. Held, because no amounts were paid out as compensation, P is not entitled to claim a deduction for compensation under sec. 162, I.R.C. 1954. 2. P filed late returns for the years 1965 and 1966 on Form 1120-S. Held, there has…
1Opinion of the Court
Simpson, Judge:
The respondent determined deficiencies in the petitioner’s Federal income tax of $14,606.34 for 1965 and $14,985.76 for 1966. He has also determined 'additions to the tax under section 6651 (a), I.R.C. 1954,1 of $2,190.95 for 1965 and $749.29 for 1966. Two issues remain for our decision: (1) Whether a corporation, whose status as a small business corporation has terminated, is entitled to deduct as compensation portions of distributions made to shareholders, even though such distributions were not treated as payments of compensation; and (2) whether the petitioner is liable for…
2Cases cited32 opinions
- Botany Worsted Mills v. United StatesSupreme Court of the United States · 1929
- Weiss v. StearnSupreme Court of the United States · 1924
- Electric & Neon, Inc. v. CommissionerUnited States Tax Court · 1971
- Ben Perlmutter and Bernice Perlmutter v. Commissioner of Internal Revenue, the Perlmutters, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1967
- Logan Lumber Company v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1966
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3Cited by138 opinions
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