(petitioner was S corporation that made and sold glass blocks for North American real estate market; S corporation president only full-time worker and was responsible for all operational and financial decisions; S corporation did not pay president salary or wages, but did make distributions which IRS treated as wages subject to FICA and Medicare; president's services generated all of S corporation's income; some of distributions not treated as loan repayments for advances president made to petitioner due to lack of substantiation; while transfers reported as loans on Forms 1120S, no supporting documentation and president did not treat such amounts as loans; court sustained IRS' wage classification of over $30,000 for each of 2007 and 2008 even though petitioner's net taxable income far less than $30,000 which meant that court expected corporation to incur taxable loss so as to generate payroll taxes).
Glass Blocks Unlimited v. Comr., T.C. Memo. 2013-180
Date of decision:
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