Universal Optical Co. v. Commissioner
United States Tax Court
1. In 1936 taxpayer's predecessor deducted $ 79,421.15 as officers' compensation. The amount included $ 41,000 authorized in November 1936 as an additional bonus, but which was in fact a distribution of cash in anticipation of a sale of all of such corporation's stock, all of which except 10 shares of preferred, was owned by the officers. In 1939 such corporation deducted $ 29,896.38 as bad debts.
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1. In 1936 taxpayer's predecessor deducted $ 79,421.15 as officers' compensation. The amount included $ 41,000 authorized in November 1936 as an additional bonus, but which was in fact a distribution of cash in anticipation of a sale of all of such corporation's stock, all of which except 10 shares of preferred, was owned by the officers. In 1939 such corporation deducted $ 29,896.38 as bad debts. This included $ 13,247.84 which was written off its best customer's account, but did not constitute a bad debt. The deduction included also $ 15,000 written off on account of a note of another…
1Opinion of the Court
OPINION.
Van Fossan, Judge:
In 1936 old Universal paid, and it deducted in its 1936 income tax return, salaries and bonuses paid to its five officers aggregating $79,421.15. The petitioner claims that part of such amount should be disallowed in 1936 as abnormal under section 711 (b) (1) (J) (ii) of the Internal Revenue Code in computing the average base period net income for the purpose of determining its excess profits credit based on income under section 713 of the Internal Revenue Code.
From the evidence adduced, it is apparent that the class of deductions, i. e., officers’ salaries and…
2Cases cited4 opinions
- William Leveen Corp. v. CommissionerUnited States Tax Court · 1944
- Green Bay Lumber Co. v. CommissionerUnited States Tax Court · 1944
- R. C. Harvey Co. v. CommissionerUnited States Tax Court · 1945
- Frank Shepard Co. v. CommissionerUnited States Tax Court · 1947
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- Campana Corp. v. CommissionerUnited States Tax Court · 1953
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