Eye Doctor's Compensation Not Reasonable.

The petitioner, a C corporation that employed an eye doctor who also owned the C corporation, paid a $2,000,000 bonus to the eye doctor in 2007.  The payment of the bonus by the C corporation had the effect of eliminating corporate income, taxable at a 35 percent rate.  The petitioner also carried over an NOL from 2007 to 2008.  The IRS argued for a reduced bonus on the basis that $2,000,000 was not reasonable under the facts.  The court agreed with the IRS on the basis that the C corporation provided no methodology as to how the doctor's bonus was computed.  The court deemed $1 million of the bonus payment to be "excessive compensation" taxed at 32 percent.   The court also upheld the IRS determination of penalties in the amount of $62,000.  Midwest Eye Center, S.C. v. Comr., T.C. Memo. 2015-53.