
    Appeal of CULTIVATOR PUBLISHING CO.
    Docket No. 1100.
    Submitted July 14, 1925.
    Decided September 8, 1925.
    
      Dam J. Chapim, Esq., for the taxpayer.
    
      John D. Foley, Esq., for the Commissioner.
    Before Grattpner, Trammell, and Phillips.
   This appeal involves a deficiency in income and profits taxes for the calendar year 1920 and is based on the disallowance by the Commissioner of a deduction claimed as representing a salary payment to one of its officers in that year.

FINDINGS OF FACT.

1. The taxpayer is a California corporation with its principal place of business at Los Angeles.

2. It was- organized in 1908 with a capital stock of $40,000, divided into 800 shares of a par value of $50 each. Frank H. Thomas and It. M. Teague each owned 399 shares, or all but 2 qualifying shares. The business of the taxpayer was managed by Thomas, who in 1920 was president and general manager. Teague gave little or no time to the business. Thomas drew a salary of $200 per month until about 1912 when his salary was increased to $250 per month and about 1919 it was again increased to $300 per month.

3. In April, 1920, Thomas sold his stock to employees of the taxpayer and withdrew from the business. On April 21, 1920, the taxpayer paid Thomas $6,839.33, which was recorded in the taxpayer’s ledger as a debit to the personal account of Thomas. During 1920 and until the time of his retirement from the business the taxpayer paid Thomas a salary, which, added to the amount paid him on April 21, amounted to $8,229.06. This entire amount was claimed as a deduction in the return filed for 1920 as representing compensation of officers. The amount of $6,839.33 was disallowed by the Commissioner. No satisfactory evidence was offered as to the purpose of such payment.

DECISION.

The determination of the Commissioner is approved.

Arundell not participating.  