1927 BTA LEXIS 2667 | B.T.A. | 1927
Lead Opinion
The petitioner contends that undrawn salaries and interest thereon credited to the officers during the taxable years 1917 to 1920, inclusive, pursuant to agreements reached at directors’ conferences are proper deductions under section 12(a) of the Revenue Act of 1917 and section 234(a) (1) of the Revenue Act of 1918, as ordinary and necessary expenses for doing business in the years in question. The respondent contends that as the minutes of the petitioner contain no mention of interest on undrawn salaries, no obligation was incurred, and he further contends that as the salaries could not be drawn without the approval of the directors, no present obligation was incurred which might be accrued.
We are of the opinion that both salaries and interest on the un-drawn portion thereof as authorized at the informal conference of the directors and as credited on the books of the company, were a liability which should be accrued on the books of the petitioner and that the respondent erred in not allowing the amounts thereof as a deduction.
Judgment will be entered for the petitioner.