Long Island Drug Co. v. Commissioner
United States Board of Tax Appeals
1. Where the respondent allowed as deductions under section 23(a) of the Revenue Acts of 1928 and 1932 the amounts of fixed salaries paid to petitioner's officers, held, that his disallowance of additional salaries based upon a percentage of net profits was not error, under the facts presneted, upon failure to prove that the distribution of net profits was directly related to services performed so as to be earned. 2. Held that petitioner has failed to present proof as to…
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1. Where the respondent allowed as deductions under section 23(a) of the Revenue Acts of 1928 and 1932 the amounts of fixed salaries paid to petitioner's officers, held, that his disallowance of additional salaries based upon a percentage of net profits was not error, under the facts presneted, upon failure to prove that the distribution of net profits was directly related to services performed so as to be earned. 2. Held that petitioner has failed to present proof as to bases and rates to show error in the respondent's determination of the depreciation allowable upon certain assets of…
1Opinion of the Court
*332OPINION.
HaRRON:
Issue 1. — The petitioner contends that the total salaries paid to the four officers were reasonable and deductible as ordinary and necessary expenses. The respondent contends that only the fixed annual salaries are deductible and that the contingent compensation was not payment for services rendered, but represents a distribution of profits and is not ordinary and necessary expense within the meaning of the applicable provisions of the statutes.
To determine whether salaries or other compensation are reasonable so as to be deductible from gross income as a business expense…
2Cited by18 opinions
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- Home Interiors & Gifts, Inc. v. CommissionerUnited States Tax Court · 1980
- Allison Corp. v. CommissionerUnited States Tax Court · 1977
- Glenshaw Glass Co. v. CommissionerUnited States Tax Court · 1946
- Allied Mach. & Eng'g Corp. v. CommissionerUnited States Tax Court · 1950
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