Bonner Springs Lodge & Sanitarium Co. v. Commissioner

*159 Before STERNHAGEN, LANSDON, and ARUNDELL.

This is an appeal from the determination of deficiencies in income and profits taxes for the years 1921 and 1922, aggregating $1,070.41. The deficiency arises from the disallowance by the Commissioner of a deduction for salary alleged to have been paid to the president.

FINDINGS OF FACT.

The taxpayer is a Missouri corporation doing business at Bonner Springs, Kans. During the taxable years all of its capital stock was owned by Henry C. Hays, its president. The corporation at no time voted or recorded any salary to Hays. The books were kept and the returns filed on the basis of cash receipts and disbursements. Hays regarded the business of the corporation as his own and treated his individual accounts and the accounts of the corporation indiscriminately, making no segregation between the two. All receipts, whether those of the corporation or those of Hays individually, and likewise all expenditures, were recorded upon the corporation's cash book and checking accounts.

Hays used the moneys of the corporation*2031 at his pleasure. Supplies purchased by the corporation were used in his personal household. All expenditures for such supplies were deducted by the corporation. The books did not disclose which of the items were those of Hays and which were those of the corporation. In making *160 the original corporation returns, Hays excluded some expenditures which he regarded as purely personal, such, for example, as his payments to the University Club and his local church contributions.

No salary was actually paid to Hays during the taxable years in question.

Originally, the corporation filed returns in which no deduction for salary was made. Hays filed no individual returns whatever for any year back to 1913. In 1924, the corporation filed amended returns, claiming salary deduction of $4,000 per year to Hays, and Hays filed individual returns showing receipt of the salary thus claimed for the years 1921 and 1922.

DECISION.

The determination of the Commissioner is approved.