*311 Before STERNHAGEN, LANSDON, and ARUNDELL.
The Commissioner determined a deficiency for 1920 of $3,915.69, of which the taxpayer admits part and appeals from so much thereof as results from the disallowance of a deduction of $7,205, representing an alleged additional salary of the president for that year.
*312 FINDINGS OF FACT.
The taxpayer is an Indiana corporation, with its principal place of business at Indianapolis. It was incorporated in the spring of 1919 and began business the following September.
On February 5, 1920, its directors adopted the following, as shown by the minutes:
On motion made by Mr. Melville S. Cohn, and duly seconded, the president of the company was authorized to fix all salaries of executive officers, including his own, to increase or decrease same as in his judgment conditions warranted, and to take such steps, with relation to financial management of the company's assets, as were in his judgment, for the company's welfare.
The motion being put upon its passage was unanimously adopted.
The president, during*2699 the taxable year and theretofore, received a fixed salary of $6,300 a year.
About the 1st of December the president told the bookkeeper that the president's salary was to be increased. The president had increased the salaries of several others, including the vice president, and said to the bookkeeper at that time that the increase in the president's salary, based upon the business done in the 11 months already passed, would be in the neighborhood of $7,000, but that the exact amount would be ascertained after the close of the year. About December 31, 1920, or January 1, 1921, the bookkeeper was told the amount of the increase would be $7,205, and was directed to enter it in the books. The bookkeeper forgot to make the entry before the books were closed. Sometime in March, when the president was going over his account, he called the bookkeeper's attention to the omission, and an entry was then made.
The president included the amount as gross income in his individual income-tax return for 1920.
DECISION.
The item of $7,205 paid to the president as salary is properly deductible by the corporation in its return for 1920. The deficiency should be computed accordingly. Final*2700 determination will be settled on 10 days' notice, under Rule 50.