Reasonable Compensation Analysis Must Incorporate Applicable Legal Test

Business Valuation UpdateVol. 16 No. 9
Legal and Court Case Update
September 2010

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7389 Business Services, NEC
561910 Packaging and Labeling Services
federal taxation
Multipak Corp. v. Commissioner
T.C. Memo. 2010-139
June 22, 2010
US
Federal Court
Federal
United States Tax Court
Kevin Murphy (taxpayer); David Fuller (IRS)
Goeke

Summary

Tax Court finds CEO compensation reasonable under the independent investor test when return on equity approaches 20% but finds -15% return unacceptable and adjusts compensation to result in 10% return.

See Also

Multipak Corp. v. Commissioner

Full Text of Court Cases
June 22, 2010

Tax Court finds CEO compensation reasonable under the independent investor test when return on equity approaches 20%, but finds negative 15% return unacceptable, and adjusts compensation to result in 10% return.