Court Opinion

ID: 4629247
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:05:00.459897+00
Date Added: 2024-06-11T07:57:21.339926
License: Public Domain

APPEAL OF PACIFIC COAST FURNITURE CO.Pacific Coast Furniture Co. v. CommissionerDocket No. 90.United States Board of Tax Appeals2 B.T.A. 734; 1925 BTA LEXIS 2300; September 30, 1925, Decided Submitted June 24, 1925.  1925 BTA LEXIS 2300">*2300 Frank M. Aitken, Esq., for the taxpayer.  W. Frank Gibbs, Esq., for the Commissioner.  2 B.T.A. 734">*734  Before GRAUPNER, TRAMMELL, and PHILLIPS.  This appeal is from the determination of a deficiency in income tax for the fiscal years ended January 31, 1919, 1920, and 1921, in the net amount of $1,708.61, being the sum of the proposed additional taxes for the fiscal years 1919 and 1020, less the amount of an overassessment of $20.38 for the fiscal year ended January 31, 1921.  The only question presented in the appeal is the disallowance by the Commissioner of additional compensation allowed the officers for the fiscal year ended in 1920 in the amount of $3,600.  No question is presented with respect to the proposed additional tax for the fiscal year ended January 31, 1919.  2 B.T.A. 734">*735  FINDINGS OF FACT.  The Pacific Coast Furniture Co. is a corporation organized under the laws of California, having its principal place of business at Santa Cruz.  During the taxable years in question it had outstanding 240 shares of capital stock of the par value of $100 per share.  One hundred and twenty shares were owned by George A. Montell and 120 shares by Fred A. Carrick.  Montell1925 BTA LEXIS 2300">*2301  devoted about one-half his time to the business and the other one-half to the Palo Alto Furniture Co. at Palo Alto, Calif.  Carrick lived in San Francisco.  Every two or three months he would come down to Santa Cruz and he and Montell would get together and talk over plans and policies of the corporation and decide on what was to be done and the methods of transaction their business.  Carrick devoted only a part of his time to the business also.  Neither Carrick nor Montell drew or received from the corporation definite amounts of money by way of salary, but the corporation credited on its books certain amounts to them.  Each drew what he needed for living expenses.  During February, 1918, and at other times Montell and Carrick talked over the question of an increase in salary for each of them for the fiscal year ending in February, 1919.  There were no book entries made, nor was any record of any minutes or any memorandum made which would indicate any official action with respect to an increase of salaries for the fiscal years ended 1919 and 1920 or 1921.  When the income-tax return was prepared by the bookkeeper, Montell, after examining it, returned it to the bookkeeper with the1925 BTA LEXIS 2300">*2302  statement that neither he nor Carrick had been credited with the proper amount of salary.  The additional compensation of $3,600 to the two officers was not credited to them on the books until April, 1921, after the income-tay return for the fiscal year involved had been prepared.  DECISION.  The determination of the Commissioner is approved.  ARUNDELL not participating.