The taxpayer appeals from the determination of a deficiency in income tax for the year 1922 in the amount of $264.48. The question in issue is whether the taxpayer is liable to income tax upon a salary of $10,400, accrued upon the books of a corporation as an expense to it for services performed by the taxpayer, or upon the amount of $6,131.43, the amount actually paid to him by the corporation during the year 1922.
FINDINGS OE FACT.
The taxpayer is á resident of New York City. He and C. R. Vincent each owned 50 per cent of the stock of Vincent-Gilson Engineering Co. The business of this corporation is purely one of selling on commission and its earnings are received at no set time, payments depending in part on final payments made by customers to whom it has rendered services. The minutes of the board of directors of the corporation show that a salary of $200 per week was voted to each of the stockholders on June 30, 1921, retroactive to January 1, 1921, which salary was in force and effect for the year 1922. In accord-, anee with this resolution, the individual account of each of the stockholders was credited in the ledger account with $200 each week for the year 1922. For that year the taxpayer was paid only $6,131.43, and Vincent only $3,564.56. In its income-tax return for 1922, the corporation deducted from gross income $20,800, representing salaries credited to the two stockholders. The taxpayer filed an original return for the year 1922, in which he reported the receipt of a salary of $10,400. He keeps no individual books of account and reported on the basis of cash receipts and disbursements. He filed'an amended return showing the receipt of a salary of $6,131.43. The Vincent-Gilson Engineering Co. was not in funds with which to pay the taxpayer and Vincent the full amount of the salary accrued to them upon the books of the corporation. The amount of cash on hand at the close of 1922 was $1,560.14.
The salary received by the taxpayer from the Vincent-Gilson Engineering Co. during the year 1922 was $6,131.43.
DECISION.
The deficiency determined by the Commissioner is disallowed. Appeal of H. C. Couch, 1 B. T. A. 103; Appeal of A. L. Englander, *12221 B. T. A. 760; Appeal of Samuel Graydon, 2 B. T. A. 552; Appeal of Edmund J. Karr, 2 B. T. A. 635; Appeal of Louis Titus, 2 B. T. A. 754.