Appeal of Parisian

2 B.T.A. 415

• Court: United States Board of Tax Appeals
• Decided: September 7, 1925
• Docket: Docket No. 583
• Status: Published

Opinion

OPINION.

Trammell:

While it is true that the minutes and official records of a corporation are the best evidence of the actions of the corporation, a corporation may lawfully act without making official minutes or records. Since the directors, who were all of the stockholders, agreed upon the salaries of officers for 1919 during that year, which salaries are found as a fact to be reasonable compensation for services rendered, they are properly deductible in determining the taxable income of the taxpayer.

The amounts due the officers of the taxpayer which were forgiven in the early part of 1920 as of December 31,1919, can not be included in the surplus of the taxpayer for the year 1919. Until the indebtedness was forgiven it was a liability of the corporation. It was not forgiven and the amounts can not be considered as having been paid in until the transaction actually occurred. It is the date of the forgiveness which governs and that date can not be changed for bookkeeping purposes.

On reference to the Board, Arundell took no part in the consideration.