Stephen Looney on Johnson, Inc. v. Commissioner and the Reasonableness of Compensation Multi-Factor Test (PDF)
In Johnson, Inc. v. Commissioner, the Tax Court held that the amounts paid to shareholder-employees of a C corporation constituted reasonable compensation deductible under IRC Section 162 and that amounts paid by the taxpayer-corporation to an entity controlled by two of its shareholders was deductible as an ordinary and necessary business expense under IRC Section 162. The court applied the multi-factor test to determine reasonable compensation.
Stephen R. Looney received his B.A., with honors, in Accounting and Business Administration from Drury College in 1981 and earned his J.D., cum laude, from the University of Missouri-Columbia in 1984, where he was also a member of the Order of the Coif and the Missouri Law Review. He received his Master's in Taxation from the University of Florida in 1985, where he graduated first in his class. He practices in the areas of tax, corporate, partnership, business and health care law, with an emphasis in entity formations, acquisitions, dispositions, redemptions, liquidations and reorganizations. His clients include closely held businesses, with an emphasis in medical and other professional practices. He is a Florida Board Certified Tax Lawyer, and is a member of The Florida Bar Association, the State Bar of Texas and the Missouri Bar Association. Additionally, he has his CPA Certificate, and is a member of the Missouri Society of CPAs. He is a past-chair of the S Corporations Committee of the American Bar Association Tax Section. Additionally, he is on the Board of Advisors and Department Heads for the Business Entities journal where he also serves as one of the editors for the Current Developments column. He is a Fellow of the American College of Tax Counsel and is listed in Best Lawyers in America in Taxation. He writes and speaks extensively on a nationwide basis on a variety of tax subjects. He is the co-author of Tax Planning for S Corporations (Matthew Bender). His articles have appeared in a number of professional publications, including the Journal of Taxation, The Tax Lawyer, the Business Entities Journal, the Journal of S Corporation Taxation, the Journal of Partnership Taxation, and the Journal of Corporate Taxation.
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