Appeal from order of County Court of Philadelphia, Feb. T., 1966, No. 489, in case of Commonwealth ex rel. Ada Shumelman v. Sol Shumelman.
Pershing N. Calabro, for appellant.
Wilbur Greenberg, with him Hillel S. Levinson, and Miller, Pincus and Greenberg, for appellee.
Ervin, P. J., Wright, Watkins, Montgomery, Jacobs, Hoffman, and Spaulding, JJ. Opinion by Spaulding, J.
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This is an appeal from an order of the County Court of Philadelphia of $150 per week for the support of
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appellant's wife and two children, Barton and Robert. Barton, age 24, is mentally retarded and attends the Pennsylvania Association School for Retarded Children. Robert, age 18, is a student at the Philadelphia Community College.
Appellant is employed by, and is one-third owner of, the L & A Creative Art Studio, a corporation. As a salesman, he receives a gross salary of $200 per week. His net weekly income after taxes, hospitalization and medical insurance for his family, is $161. Appellant testified that his personal expenses, including business use of his automobile, amounted to approximately $44 per week. He has an insurance policy, with his wife as beneficiary, which costs about $2 per week and he contributes $19 weekly for school expenses of Barton and Robert. His income balance is accordingly reduced to approximately $100 per week.
Appellee contends that this statement of income is inaccurate and refers to appellant's 1964 income tax return which reflected a gross income of $13,600. However, this return included a $3000 bonus which, according to appellant, was a mere "paper bonus" remaining in the corporation and unavailable for personal use. This testimony was not contradicted and we have no reason to discredit it.
We agree with the court below that wages paid by a closely held corporation to one of its principal owners must be closely scrutinized, Commonwealth ex rel. Arena v. Arena, 205 Pa. Superior Ct. 76, 207 A.2d 925 (1965), and that frequently there is the opportunity "to control and manipulate accounting practices, and to receive payments and benefits which are masked as business expenses." However, opportunity for overreaching, without more, does not justify the conclusion of its existence. There is no evidence that appellant receives payments and benefits designated as business expenses which would warrant an inference that his
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earning capacity is greater than the approximate $200 weekly gross to which he testified. Nor is there evidence that the corporation has accumulated large profits in lieu of a fair and reasonable salary schedule. The corporation maintains a cash position ...