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L&B Pipe & Supply Company v. Commissioner Of Internal Revenue

Practice Area: Tax

Outcome: Did not have to pay tax on $2.6 million of income

Description: IRS treated $2.6 million of compensation paid by this C corporation as a dividend, meaning it was "unreasonable" compensation. The result would have been a $1,000,000 tax at the corporate level, along with significant interest and penalties. The taxpayers were able to show, through the introduction of expert testimony, that the compensation for the years 1987 - 1989 was reasonable.

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