
    W. W. Sheane Auto Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 5187.
    Promulgated January 16, 1928.
    
      Matthew W. Hill, Esq., and «4. G. Elder, Esq., for the petitioner.
    
      Henry Bavenel, Esq., for the respondent.
   Lansdon :

The respondent has asserted a deficiency in income and profits tax for the year 1919 in the amount of $3,919.33. The only issue involved is the reasonableness of the salary paid the president of the petitioner during the taxable year.

BINDINGS OP PACT.

The petitioner is a Washington corporation with its principal place of business at Yakima and with a branch office at Toppenish. During the taxable year it was engaged in the sale of automobiles, repair parts, and motor vehicle accessories, and in the operation of garages at its two places of business. Its sales for such year amounted to $1,094,336.13. It employed between 35 and 40 persons as salesmen, mechanics, and in other capacities required by the nature of its business. During the year it borrowed large amounts of money and discounted many notes made by purchasers of automobiles and trucks. Its financial condition and standing were such that it was necessary for its president and secretary personally to endorse and guarantee all paper which it discounted at the banks.

The president of the petitioner was regularly and actively engaged in the business during the taxable year. He had long been in the automobile business and was familiar with all the details essential to commercial success of such an enterprise. The compensation claimed was authorized by proper corporate action. The amount of $6,000 was paid to the president during the year as salary, and was no more than a reasonable compensation for the services rendered.

Judgment will be entered on £0 days' notice, wider Bule 50.  