Carole Accessories, Inc. v. Commissioner
United States Tax Court
Petitioner was in the costume jewelry business. Its officer-shareholders performed the duties of managers, salesmen and occasionally clerks. "Bonuses" for the officer-shareholders were determined at the end of each year according to the ability of petitioner to pay. During the years in question the bonuses increased substantially. From its incorporation to the period in question petitioner has not paid dividends.
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Petitioner was in the costume jewelry business. Its officer-shareholders performed the duties of managers, salesmen and occasionally clerks. "Bonuses" for the officer-shareholders were determined at the end of each year according to the ability of petitioner to pay. During the years in question the bonuses increased substantially. From its incorporation to the period in question petitioner has not paid dividends. Held: a reasonable salary for the officer-shareholders is less than that claimed by petitioner. Held: that part of the bonuses represented distributions of earnings.
1Opinion of the Court
CAROLE ACCESSORIES, INC., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Carole Accessories, Inc. v. Commissioner
Docket Nos. 2155-68 and 3381-70.
United States Tax Court
T.C. Memo 1973-273; 1973 Tax Ct. Memo LEXIS 14; 32 T.C.M. (CCH) 1285; T.C.M. (RIA) 73273;
December 11, 1973, Filed.
Petitioner was in the costume jewelry business. Its officer-shareholders performed the duties of managers, salesmen and occasionally clerks. "Bonuses" for the officer-shareholders were determined at the end of each year according to the ability of petitioner to pay. During the years in question the…
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