Court Opinion

ID: 37138
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:49:29+00
Date Added: 2024-06-11T17:15:34.080625
License: Public Domain

United States Court of Appeals
                                                                     Fifth Circuit

                                                                 FILED
                     UNITED STATES COURT OF APPEALS         December 9, 2004
                          For the Fifth Circuit
                                                          Charles R. Fulbruge III
                                                                  Clerk

                              No. 03-61040

                       BREWER QUALITY HOMES, INC.,

                                                Petitioner-Appellant,

                                 VERSUS

                    COMMISSIONER OF INTERNAL REVENUE,

                                                 Respondent-Appellee.

               Appeal from the United States Tax Court

                           ( 1:02-CV-110-Ro )
Before DeMOSS, STEWART, and CLEMENT, Circuit Judges.

PER CURIAM:*

     Brewer Quality Homes (“BQH”) was issued a statutory notice of
deficiency     by    the   Internal   Revenue   Service      (“IRS”            or
“Commissioner”) for BQH’s corporate income tax returns filed for
fiscal years 1995 and 1996.      BQH sought a redetermination of the
deficiencies with the United States Tax Court.       The Tax Court found
that BQH was not permitted to deduct certain compensation paid to
Jack Brewer (BQH’s founder, principal officer, and 50% shareholder)
because that compensation was not reasonable in amount, determining
that the excess monies paid Brewer by BQH constituted a disguised

     *
       Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
dividend.   BQH timely filed the instant appeal.
                   BACKGROUND AND PROCEDURAL HISTORY
     BQH was incorporated in 1977 in Bossier City, Louisiana, as a

retail seller of mobile homes.    Jack Brewer (“Mr. Brewer”) and his

wife, Mary, each owned fifty percent of BQH’s stock, which is not

publicly traded.    Mr. Brewer started BQH as a sole proprietorship

in 1973, using equity from his home in addition to a bank loan.

BQH has alternated its corporate form several times since its

inception, going from an S Corporation in 1987, to a C Corporation

in 1988.    BQH returned to an S Corporation in 1989 through 1993,

when it again reverted to a C Corporation.

     During the early 1970s, the 1980s, and the early 1990s, BQH

survived several economic downturns that ultimately caused many

mobile home dealers in BQH’s region of the country to go out of

business. BQH was able to take advantage of the financial distress

experienced by his competitors and purchased many mobile homes from

them at favorable prices.    Over the years, BQH was involved in the

retail sales of approximately twenty different brands of mobile

homes, and in 1995 and 1996, the years at issue here, BQH’s

principal product was the Fleetwood Homes line.    During the market

year from 1995-1996, BQH was ranked thirty-sixth nationally among

the 1,300 Fleetwood Homes retailers.     The following market year,

1996-1997, BQH was ranked first among Fleetwood Homes dealers in

the state of Louisiana and thirteenth nationally.      In addition to

the actual sales of mobile homes, BQH began, in the early 1990s,

                                   2
offering its customers financing and insurance, both of which were

underwritten by BQH.      BQH, therefore, began realizing profits from

interest   on   the    loans   it   made   and    from   commissions    for   the

insurance policies it issued its customers.

     While Mr. Brewer was BQH’s only employee in its first year, by

the early 1990s, BQH employed approximately sixteen individuals.

By 1996, BQH had twenty-two employees, seven of whom were in sales.

In 1993, while still an S Corporation, BQH distributed $116,100 to

its only two shareholders (Mr. and Mrs. Brewer).                   In 1994, BQH,

then a C Corporation, distributed $320,949 to the Brewers.                 Up to

the end of the 1996 fiscal year, the 1993 and 1994 distributions

were the only ones made by BQH.        While BQH did not have an official

or written salary policy or bonus plan, it operated under a general

policy of paying compensation equal to or higher than comparable

companies in its market.1

     In 1995 and 1996, BQH paid its employees, other than Mr.

Brewer, annual salaries ranging from $18,000 to $75,407.                In 1995,

BQH paid Mr. Brewer an annual salary of $62,186 in addition to

$700,000 paid on December 31, 1995, as a bonus.                    Similarly, in

1996, BQH paid Mr. Brewer an annual salary of $63,559 and, on

December 31, 1996, paid Mr. Brewer $800,000 as a bonus.                       Mr.

Brewer’s compensation in 1995 represented 82% of BQH’s taxable

income   for    that   year,   while   Mr.       Brewer’s   1996    compensation

     1
       BQH also offered its non-shareholder employees with paid
health insurance, sick leave, and vacation leave.

                                       3
accounted for 85% of BQH’s total taxable income for 1996.2                    In sum,

BQH paid and deducted total compensation to Mr. Brewer of $762,186

in 1995 and $863,559 in 1996.

       The IRS commenced an audit of BQH for fiscal years 1995 and

1996 and, in February 1999, issued BQH a statutory notice of

deficiency in February 1999.          The sole issue raised in the notice

was whether the compensation paid by BQH to Mr. Brewer during the

two years in question were fully deductible by BQH.                        The notice

also contained the IRS’s proposed adjustments to BQH’s corporate

income tax returns.       Although the IRS eventually made concessions

by allowing BQH to deduct compensation paid to Mr. Brewer in the

amounts      of   $604,117     for   1995     and    $485,966        for   1996,    BQH

nevertheless filed a petition in United States Tax Court, seeking

a redetermination of the deficiencies alleged by the IRS.

       The case was tried over the course of three days in June 2000.

A total of four witnesses testified at trial, including Mr. Brewer,

Jack Sledge (Mr. Brewer’s accountant, who was called as an expert

witness), Mae Lon Ding (an expert called by BQH), and Dr. Scott

Hakala (the IRS’s expert witness).               Not surprisingly, Sledge and

Ding       produced   expert    reports       concluding      that     Mr.   Brewer’s

compensation      was   reasonable,    while        Hakala    testified      that   the

amounts paid to Mr. Brewer were excessive.                   On July 10, 2003, the

       2
      The taxable income figure used in this example is the amount
of taxable income before the deduction of Mr. Brewer’s claimed
compensation.

                                          4
Tax Court issued a memorandum opinion in which it determined that

BQH could deduct not more than $610,000 as reasonable compensation

for Mr. Brewer for 1995, and not more than $630,000 as reasonable

compensation for 1996.       The Tax Court thereafter entered its

decision in accordance with its memorandum opinion and BQH filed

this subsequent appeal.

                              DISCUSSION

I.   Whether the notice of appeal mailed on November 25, 2003, and
     filed on December 1, 2003, was timely.

     A panel of this Court directed the parties to brief the issue

of whether the notice of appeal was timely.   Both parties complied

with this directive and now agree that such notice was filed within

all applicable deadlines. Nevertheless, a brief summary of why the

appeal was timely follows.

     Under FED. R. APP. P. 13(a)(1), a notice of appeal from a tax

court is timely if it is filed within ninety days of the decision.

If the notice of appeal is sent by mail, it is considered filed on

the postmark date. FED. R. APP. P. 13(b).3    Here, the Tax Court

entered its decision on August 27, 2003.   BQH filed its notice of

appeal by mailing the required notice to the Tax Court Clerk of

Court, properly addressed, in an envelope suitable for mailing, via

     3
      While the date of the mailing will be normally controlled by
the postmark date, this rule is subject to exceptions found in §
7502 of the Internal Revenue Code. 26 U.S.C. § 7502. Based on a
review of § 7502, however, none of the exceptions have any
applicability in this case.

                                  5
certified mail, return receipt requested, on November 25, 2003 –

exactly ninety days from the date the Tax Court entered its

decision.       While the photocopy of the envelope in which the notice

of appeal was mailed apparently did not show a legible postmark,

BQH later provided a photocopy of the certified mail receipt

showing     a   postmark     of    November     25,    2003.     In   light    of   the

photocopied receipt, it is agreed between the parties that the

notice of appeal was timely filed.

II.    Whether the Tax Court clearly erred in finding that the
       amounts paid as compensation to BQH’s founder and president
       were unreasonable and therefore not entirely deductible under
       the Internal Revenue Code.

       The Tax Court’s determination of whether compensation paid by

a corporation is reasonable is a question of fact that will not be

reversed unless it is clearly erroneous.                 Rutter v. Cmm’r, 853 F.2d

1267, 1271-72 (5th Cir. 1988).                 A finding is “clearly erroneous”

when although there is evidence to support it, the reviewing court

on    the   entire      evidence    is   left     with    the   definite    and     firm

conviction       that    a   mistake     has    been     committed.   Id.     at    1272

(quotations and citation omitted).               The definition and application

of the appropriate factors the Tax Court considers in making its

determination is reviewed de novo. Id.

       Section 162(a)(1) of the Internal Revenue Code permits a

corporation to deduct “a reasonable allowance for salaries or other

compensation for personal services actually rendered.” 26 U.S.C. §

162(a)(1). It follows, therefore, that “the test for deductibility

                                           6
in the case of compensation payments is whether they are reasonable

and are in fact payments purely for services.” Treas. Reg. § 1.162-

7(a).4      A deduction for compensation that is, in fact, reasonable

is an amount “as would ordinarily be paid for like services by like

enterprises under like circumstances.” Id. § 1.162-7(b)(3). Here,

there is no dispute that Mr. Brewer actually performed services for

BQH.       In fact, there was evidence presented to the Tax Court that

Mr. Brewer has exercised complete control over BQH since it was

founded and has fulfilled many roles within the corporation. The

focus of our inquiry, therefore, is on the reasonableness of the

compensation paid to Mr. Brewer by BQH.

       The Tax Court’s reasonableness inquiry is governed by the

nine-factor test set forth in Owensby & Kritikos, Inc. v. Cmm’r,

819 F.2d 1315 (5th Cir. 1987).      These factors include

       the employee’s qualifications; the nature, extent and
       scope of the employee’s work; the size and complexities
       of the business; a comparison of salaries paid with gross
       income and net income; the prevailing general economic
       conditions; comparison of salaries with distributions to
       stockholders; the prevailing rates of compensation for
       comparable positions in comparable concerns; [and] the
       salary policy of the taxpayer as to all employees.

Id. at 1323 (alteration in original).

       No single factor is decisive of the question; rather the trial

court must consider and weigh the totality of the facts and

       4
       The two-part deductibility test is designed generally for
corporations “having few shareholders, practically all of whom draw
salaries.” Treas. Reg. § 1.162-7(b)(1).      The close-corporation
structure contemplated by the Treasury Regulations applies to BQH’s
corporate form in the instant case.

                                     7
circumstances in determining reasonable compensation. Id.                 Also,

the   Commissioner’s     determination      of    reasonableness    carries   a

presumption of correctness, placing the burden on the taxpayer to

establish that he is entitled to a deduction larger than that

allowed by the Commissioner. Id. at 1324.

      BQH contends that while the Tax Court properly identified the

nine-factor test adopted by this Court, it nevertheless failed to

provide even a minimal analysis and application of those factors.

BQH specifically argues that although the Tax Court considered ten

“indicia” of reasonable compensation, with five in favor of BQH and

five in favor of the IRS, those “indicia” can only be roughly

related   to   the   nine   factors   the   Tax    Court    was   obligated   to

consider. The IRS responds that the Tax Court carefully considered

all the factors discussed in Owensby & Kritikos, and points to the

record as providing the necessary support for each of the Tax

Court’s findings.

      As a preliminary matter, it should be noted that while BQH

repeatedly     argues   throughout    its   brief    that   the   Tax   Court’s

analysis is only “roughly related” to the nine-factor test, it

provides no specific reasons to support this contention.                In fact,

BQH only raises arguments as to two of the factors in the nine-

factor inquiry: (1) dividend practices and return on equity; and

(2) the prevailing rates of compensation for comparable positions

                                      8
in comparable concerns.5           Even in the absence of any specific

critique on behalf of BQH, this opinion nevertheless addresses the

analysis and application of the relevant factors employed by the

Tax Court to determine whether its decision was clearly erroneous.

      1.     Mr. Brewer’s Qualifications

      As mentioned previously, it is undisputed between the parties

that Mr. Brewer was qualified for the different positions he held

at BQH.      The Tax Court observed this fact as well and determined

that this factor weighed in favor of a relatively high compensation

for Mr. Brewer.

      2.     Nature, Extent, and Scope of Mr. Brewer’s Work

      The Tax Court found that Mr. Brewer worked long hours and that

his hard work was the driving force behind BQH’s success, noting

Mr. Brewer’s ability to fulfill numerous roles, including serving

as   BQH’s    president,   chief    financial   officer,   chief   executive

officer, general manager, sales manager, loan officer, credit

manager,     purchasing    officer,    personnel    manager,     advertising

manager, insurance agent, and real estate manager.             The Tax Court

also determined that through Mr. Brewer’s “enthusiasm, hard work,

and dedication, he built [BQH] into a successful enterprise.”             As

such, the Tax Court concluded that this factor weighed in favor of

      5
       BQH appears to want this panel to determine that the Tax
Court did not apply the appropriate factors so that we will conduct
a de novo review of the case, instead of the clearly erroneous
standard that would be applicable if it were concluded that the Tax
Court properly considered all relevant factors.

                                       9
a high compensation for Mr. Brewer.             Tempering this finding,

however, this Court has observed that “[n]onetheless, limits to

reasonable     compensation   exist      even   for   the     most     valuable

employees.” Rutter, 853 F.2d at 1272.

      3.   Size and Complexity of BQH

      The Tax Court recognized the growth BQH made over the years,

especially noting the substantial success it enjoyed beginning in

the early 1990s.     The Tax Court cited BQH’s rise in the national

rankings among Fleetwood Homes retailers as evidence of this fact.

The Tax Court also noted the different aspects of BQH’s operations,

specifically observing BQH’s foray into the financing and insurance

aspects of mobile home sales.            In sum, the Tax Court made a

determination that this factor favored a higher compensation for

Mr. Brewer.

      4.   Comparison of Mr. Brewer’s Salary with Gross & Net Income

      The Tax Court found that the claimed compensation BQH paid to

Mr.   Brewer    in   1995   and   1996    constituted       8.5%     and   8.7%,

respectively, of BQH’s gross sales and 82% and 85%, respectively,

of BQH’s taxable income.      The Tax Court employed financial ratios

in its various computations from the Robert Morris Associates

(“RMA”) report, a resource for the mobile home industry, which

provides data on, among other things, executive compensation as a

percentage of sales for companies comparable to BQH. The Tax Court

determined that the RMA study of comparable companies revealed a

median value of compensation as a percentage of gross sales as 2.3%

                                    10
for 1995 and 1.8% for 1996.                Nevertheless, the Tax Court did not

rely on the median value in reaching its decision, relying instead

on   the     values       accorded    to     the      90th      percentile    of    officer

compensation payments, a reflection of the Tax Court’s earlier

finding regarding BQH’s financial successes during the years in

question.          The Tax Court even accepted BQH’s expert witness’s

suggestion that the percentage of gross sales for 1995 and 1996

were 6.0% and 6.3%, respectively.                        Nonetheless, the Tax Court

determined         that    Mr.     Brewer’s        compensation      percentages          were

substantially higher than the figures urged by BQH’s expert, thus

leading the Tax Court to conclude that reasonable compensation

would have been significantly less than BQH’s actual payments to

Mr. Brewer.

       After making this determination, the Tax Court multiplied

BQH’s sales by the corresponding RMA ratio for each year in

question to arrive at the appropriate compensation amounts for the

services Mr.         Brewer      performed      for      BQH:    $520,000    in    1995   and

$600,000 in 1996.          The Tax Court thereafter added $5000 to the 1995

amount to account for Mr. Brewer’s guaranty of a bank loan to BQH

that       year,    and    added     5%    of      Mr.    Brewer’s    newly-calculated

compensation to make up for the absence of retirement benefits.

The total amount of reasonable compensation for Mr. Brewer as

determined by the Tax Court was ultimately $610,0006 for 1995 and

       6
        The IRS’s expert witness offered a formula and a
corresponding dollar figure that attempted to redetermine Mr.

                                              11
$630,000 for 1996.

     5.    Prevailing General Economic Conditions

     The Tax Court noted in its findings of fact that BQH had

survived several economic downturns, evidencing BQH’s resilience.

The Tax Court specifically recognized Mr. Brewer’s efforts in

ensuring BQH’s ability to survive those conditions, and as such

found this factor favored a relatively high compensation.

     6.    Comparison of Salaries with Distributions to Stockholders

     In 1993, BQH distributed $116,100 to its only two shareholders

(Mr. and Mrs. Brewer).    In 1994, BQH distributed $320,949 to the

Brewers.   Up to the end of the 1996 fiscal year, the 1993 and 1994

distributions were the only ones made by BQH.       The Tax Court was

troubled by the fact that the profitability of BQH was considerably

higher in 1995 and 1996 than previous years, yet BQH did not make

any distributions whatsoever. By paying compensation to Mr. Brewer

in the amounts BQH did in 1995 and 1996, the Tax Court concluded

that this factor weighed heavily in favor of a low compensation for

Mr. Brewer.

     7.    Compensation   for   Comparable   Positions   in   Comparable
           Concerns

     The Tax Court determined that Mr. Brewer received compensation

Brewer’s reasonable compensation. The IRS relied upon this formula
and the Tax Court accepted the recommendation offered by the
expert. It turned out, however, that based on mathematical errors
committed by the expert, the actual compensation figure for 1995
was higher than initially represented.      Therefore, the upward
correction was made on favor of BQH, raising the amount deductible
from $550,00 to $610,000.

                                  12
higher than those executives in comparable companies.            BQH argues

that the Tax Court failed to consider that Oakwood Homes, a BQH

competitor, would have paid Mr. Brewer over $800,000 per year in

both 1995 and 1996.       In support of its argument, BQH cites a

recruiting advertisement issued by Oakwood Homes in which it asks,

“Have you ever wondered what it would be like to work with a

company whose top sales personnel earn more than $100,000 a year,

and whose top sales managers earn more than $800,000?”             BQH also

cites a letter written by Thom Cross, a vice-president of Oakwood

Homes, in which Mr. Cross apparently states that Oakwood Homes was

paying people in BQH’s region the salaries quoted above and that

Oakwood Homes would be interested in hiring Mr. Brewer and give him

a compensation package that would allow him to make up to $800,000

per year.

     In response, the IRS’s expert witness testified that the

advertisement    reflected       salaries    for   what    a   mobile   home

manufacturer or retailer with annual sales of $100 million or more

would pay its most senior and successful sales executives. BQH, by

contrast, had sales during all relevant time periods of between $9

and $10 million.    Also, the IRS points to the fact that Mr. Cross

was not called by BQH to testify as to Oakwood Homes’ desire to

hire Mr. Brewer for the amounts stated. Moreover, the IRS suggests

that by not calling Mr. Cross to testify, it is impossible to

determine   to   what   extent    the    advertisement’s   vague   language

concerning salary ranges represents “recruiting hyperbole” and to

                                        13
what extent it represents actual compensation.

     The    Tax    Court   relied   instead   upon   the   RMA   data,   which

systematically draws from numerous companies across the industry

and permits objective comparisons between executive compensation

and company performance.       It is also noteworthy that both parties

relied almost exclusively upon the RMA ratios, but, on appeal, BQH

shifted its focus to address only its argument regarding the

Oakwood Homes advertisement. In sum, the speculative nature of the

Oakwood    Homes   advertisement     cannot   replace   the   RMA   formulaic

approach both parties initially adopted and upon which the Tax

Court ultimately relied.

     8.     Salary Policy of BQH as to All Employees

     As discussed previously, BQH did not maintain an official

salary policy for any of its employees, including Mr. Brewer.              The

Tax Court expressed concern that because Mr. Brewer essentially

controlled BQH, he was able to set his own compensation.            While the

IRS concedes that BQH paid its employees salaries equal to or

greater than those paid by its competitors,7 it argues the wide

disparity between the salary paid Mr. Brewer and the next highest-

paid employee supports a low compensation amount.

     Substantial bonuses declared at the end of the year when the

earnings of a business are known usually indicate the existence of

disguised dividends. Owensby & Kritikos, 819 F.2d at 1329 (citation

     7
         BQH’s highest-paid employees earned salaries in the $70,000
range.

                                      14
omitted).     Moreover, this Court has previously determined that,

especially in the context of closely held corporations, “it is in

the tax     interest   of   all   parties   to    characterize   the   amounts

distributed to shareholders/officers as compensation rather than

dividends.” Rutter, 853 F.2d at 1270.            Because the “[d]istribution

of profits through compensation payments to shareholder/officers

avoids the double tax on corporate profits which are distributed to

shareholders as dividends,” the concern arises where corporations

distribute their profits through the payment of unreasonably large

salaries and bonuses to those controlling shareholder/officers. Id.

at 1271.    Therefore, it is necessary to “carefully scrutinize the

payments to ensure that they are not disguised dividends.” Owensby

& Kritikos, 819 F.2d at 1324.

     In Owensby & Kritikos, the two principal shareholder/officers

“exerted substantial influence over these ‘discretionary bonuses,’”

which the court observed involved amounts of money that “were not

the result of a longstanding compensation formula and could hardly

be considered contingent compensation in the fullest sense of that

term.” 819 F.2d at 1329.          Similarly, Mr. Brewer clearly held a

position of unmatched control and influence over the business

decisions at BQH. Furthermore, because BQH admittedly did not have

any type of written compensation policy, it becomes hard to argue,

as BQH does, that the amounts of the bonuses paid Mr. Brewer were

part of a “contingent compensation” arrangement.

     9.     Amount of Compensation Paid to Mr. Brewer in Previous

                                      15
          Years

     BQH argued before the Tax Court that it underpaid Mr. Brewer

in previous years, particularly in 1992 and 1993.         The Tax Court

rejected this argument, finding persuasive the absence of any

corporate minutes reflecting any mention of BQH’s intention to

compensate   Mr.   Brewer   for   past   years   of   undercompensation.

Moreover, the Tax Court noted that neither of BQH’s experts could

provide any credible testimony regarding the alleged underpayments

or the specific years in which they occurred, stating that BQH’s

“theory of compensation for prior services [appeared to be] only an

afterthought developed at a time when the reasonableness of the

compensation was already under attack.”

     Admittedly, the Tax Court does not perform its reasonable

compensation analysis in a factor-by-factor manner much like the

court in Owensby & Kritikos did.         On the other hand, the fact-

finding done by the Tax Court fleshes out many of the relevant

items that support its ultimate redetermination of reasonable

compensation for Mr. Brewer.      A similar type of situation existed

in Rutter, where the taxpayer argued that the tax court did not

specifically apply each of the nine factors identified in Owensby

& Kritikos. Rutter, 853 F.2d at 1271.            Instead, the taxpayer

argued, the tax court relied solely on the reports and testimony of

expert witnesses regarding only one factor — the prevailing rates

of compensation for comparable positions in comparable concerns —

and did not consider or weigh any of the other eight factors in

                                   16
reaching its decision.            Id.       This Court observed that the tax

court’s opinion reflected its awareness of the relevant factors and

that the tax court made findings of fact as to each of them, some

of which were considered extensive. Id. at 1272.

      Here, the Tax Court cited Owensby & Kritikos nine times

throughout its analysis, suggesting both that it was fully aware of

the relevant precedent and that it considered the necessary factors

in arriving at its conclusion.8               As discussed above, the Tax Court

also made extensive findings of fact relating to all nine factors.

Nevertheless, Rutter held that it was not clearly erroneous for a

court to   consider        some   of    the      factors    “without    an   extensive

detailed written analysis.” 853 F.2d at 1272.                   The Tax Court here

has   engaged    in    a     thoughtful,          well-reasoned        analysis   that

incorporated,    inter      alia,       the    testimony      and   written   reports

provided by the various experts, while commenting on all the

relevant   facts      necessary        to     make   a     reasonable    compensation

determination.

                                    CONCLUSION

      We conclude that the notice of appeal mailed by BQH on

November 25, 2003, and filed on December 1, 2003, was timely.

Further, we conclude that the Tax Court properly identified the

appropriate standard for determining whether compensation paid an

      8
       In fact, the Tax Court specifically states: “In determining
the maximum reasonable compensation for [Mr. Brewer]’s services for
the years in issue, we have considered the relevant factors listed
in Owensby & Kritikos, Inc. v. Commissioner.”

                                            17
employee    was   reasonable.      Thus,   under   the   clearly   erroneous

standard, the Tax Court’s decision in redetermining Mr. Brewer’s

reasonable compensation was proper.          Nevertheless, even if we were

to conclude that the Tax Court did not properly apply the relevant

standard to the facts here, under a de novo review, the Tax Court’s

decision comports with the stated purposes in the relevant Treasury

Regulations,      the   Internal   Revenue    Code,   and   this   Circuit’s

precedent.    We therefore AFFIRM the decision of the Tax Court for

the reasons cited in its memorandum opinion.

AFFIRMED.

                                     18