Tax Court, Frustrated by Inadequate Data, Inscrutable Analyses, Bases Reasonable Compensation on RMA Ratios

Business Valuation UpdateVol. 9 No. 9
Legal and Court Case Update
September 2003

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1521 General Contractors-Single-Family Houses
236115 New Single-Family Housing Construction (except For-Sale Builders)
federal taxation
discount rate, reasonable compensation, weighted average cost of capital (WACC), corporate tax, fair market value (FMV), rules of thumb, capital asset pricing model (CAPM)
Brewer Quality Homes, Inc. v. Commissioner (I)
T.C. Memo 2003-200
July 10, 2003
US
Federal Court
United States Tax Court
J. Michael Sledge, CPA (for Brewer), Mae Lon Ding (for Brewer), Scott D. Hakala (for IRS)
Chabot

Summary

The issue in this case was the reasonableness of compensation paid to the shareholder and primary officer of Brewer Quality Homes Inc. (Brewer).

See Also

Brewer Quality Homes, Inc. v. Commissioner (I)

Full Text of Court Cases
July 10, 2003

Issue is the extent to which amounts that petitioner paid to shareholder-officer are deductible as reasonable compensation under section 162(a)(1).