$1 million compensation to a sole shareholder found reasonable.The Tax Court allowed a corporate deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. for the entire compensation paid to the sole shareholder of a corporation - an annual amount exceeding $1.5 million. The corporation owned and managed three automobile automobile, self-propelled vehicle used for travel on land. The term is commonly applied to a four-wheeled vehicle designed to carry two to six passengers and a limited amount of cargo, as contrasted with a truck, which is designed primarily for the transportation of dealerships and compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. the shareholder-manager with a base salary plus bonus based on the dealerships' pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern profits. In reaching its decision, the court noted that during the three years under audit, the dealerships' financial performance had improved dramatically - with sales up over 350% and net aftertax income up over 750%. Despite the lack of dividend payments, the court found the exceptional return on shareholder equity suggested the compensation arrangement would have satisfied a hypothetical Hypothetical is an adjective, meaning of or pertaining to a hypothesis. See:
Observation: The fact that other unrelated employees also were compensated using a profit-based formula was a factory in the court's decision. Moreover, the bonus formula the corporation used for its shareholder-manager was found to be consistent with compensatory arrangements in the auto dealership industry. |
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