J. E. Duval Printing Co. v. Commissioner

1 B.T.A. 1205, 1925 BTA LEXIS 2612

• Court: United States Board of Tax Appeals
• Decided: May 23, 1925
• Docket: Docket No. 2031.
• Status: Published

Opinion

OPINION.

Green :

The question here presented is the right of a corporation, after dissolution and in the absence of any agreement as to compensation, to set up on its books additional salaries for officers and to take them as a deduction against the income of the corporation for the taxable period prior to its dissolution. In this case the salaries of the officers were paid monthly and charged as expense. There is no evidence of any intention on the part of the corporation to increase this salary allowance. The increase was determined upon and entered upon the books, not before or at the close of the corporation’s taxable period, but at the close of the individual’s taxable period. It is clear that no such action was contemplated at the time the corporation was dissolved. Salaries of a specific amount have been paid consistently for many months and no additional salaries have been paid, accrued, or even contemplated, prior to the date of the corporation’s dissolution. Therefore, additional salaries paid or accrued after the dissolution of the corporation and after the close of its taxable period may not be taken as a deduction for such taxable period.