R. D. Lidstone Co. v. Commissioner , 9 B.T.A. 447 ( 1927 )

R. D. LIDSTONE CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

R. D. Lidstone Co. v. Commissioner

Docket No. 4133.

United States Board of Tax Appeals

9 B.T.A. 447; 1927 BTA LEXIS 2583;

December 1, 1927, Promulgated

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The amount of $8,900 paid to petitioner's president, vice president, and treasurer, respectively, during the year 1917 constituted reasonable salaries for services actually rendered in that year.

Frank J. Albus, Esq., for the petitioner.

M. N. Fisher, Esq., for the respondent.

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LOVE

This proceeding is for the redetermination of a deficiency in income and profits taxes for the calendar year 1917, in the amount of $1,811.59. The deficiency results from the respondent's action in disallowing as a deduction from gross income the amount of $6,300, which amount, it is alleged, represents salaries paid to the petitioner's president, vice president, and treasurer for services performed in 1917.

FINDINGS OF FACT.

The petitioner is a corporation engaged in the retail wearing-apparel business at Worcester, Mass.

R. D. Lidstone, petitioner's president, during the year 1917 devoted his entire time to the business. He was the general manager and his duties consisted of the purchasing of merchandise, trimming windows, and generally advertising the business. During the year 1917, he received from the petitioner the amount of $4,700 as salary. Of this amount the Commissioner disallowed as a deduction $2,100.

During the year 1917, Harry Reamer was petitioner's vice president. He kept all of the books, signed checks, and looked after the finances of the business. He devoted about one-half of his time to the business. He received in 1917 for services rendered the amount of $2,100, which amount the Commissioner disallowed as a deduction.

During the year 1917, Charles Miller was petitioner's treasurer. He had been connected with the other officers in business ventures for many years. In 1917, although ill a great deal, he devoted all of the time he could to petitioner's business as general merchandising man. He received in 1917 as compensation the amount of $2,100, which amount the Commissioner disallowed.

During the year 1917, the petitioner transacted a gross business of over $100,000.

The amounts of $4,700, $2,100, and $2,100, paid to petitioner's president, vice president, and treasurer, respectively, constituted reasonable compensation for services performed in 1917.

OPINION.

LOVE: The Commissioner erred in disallowing as a deduction from gross income for 1917 the amount of $6,300. The total amount of $8,900 paid to the three officers constituted reasonable compensation for services rendered during that year by petitioner's officers.

Judgment will be entered on 15 days' notice, under Rule 50.

Considered by TRUSSELL, SMITH, and LITTLETON.