Hunt Foods, Inc. v. Commissioner
United States Tax Court
1. Petitioner's board of directors voted its two principal officers, who were minority stockholders, a fixed salary plus bonuses based upon percentages of corporate earnings. The officers devoted all their time to the corporation.
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1. Petitioner's board of directors voted its two principal officers, who were minority stockholders, a fixed salary plus bonuses based upon percentages of corporate earnings. The officers devoted all their time to the corporation. Held, the compensation paid the two officers was a reasonable allowance for the personal services actually rendered. 2. Petitioner drew sight drafts with attached bill-of-lading on its customers for merchandise sold, which it used as security with its bank to borrow money for the operation of its business. The bank collected the sight drafts and applied the proceeds…
1Opinion of the Court
OPINION.
Rice, Judge:
The first issue involves the reasonableness of amounts deducted by petitioner as compensation for personal services actually rendered by its president and vice president. Respondent determined that $3,712.94 of the $41,712.94 paid Lovegren is unreasonable, and that $5,312.94 of the $33,312.94 paid Eustis is unreasonable. Respondent contends that he has allowed as a deduction more than twice as much as Lovegren had ever received and nearly twice as much as Eustis had ever received. He contends further that the large increase in petitioner’s volume of business was due to the…
2Cases cited27 opinions
- Burton v. United StatesSupreme Court of the United States · 1905
- Trust Under the Will of Bingham v. CommissionerSupreme Court of the United States · 1945
- Federal Reserve Bank of Richmond v. MalloySupreme Court of the United States · 1924
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- Exchange Nat. Bank of Pittsburgh v. Third Nat. Bank of NYSupreme Court of the United States · 1884
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