The opinion
Murdock, J., dissenting: The result reached by the majority in holding that the entire stock bonus was a class of deduction separate from current cash salaries, was abnormal in class, and, therefore, should be disallowed as a deduction, defeats the very purpose of the statute. That purpose is to construct what would be normal income tor the base years by eliminating deductions for items which were not normal for those years. The findings show that the directors entered into the bonus contracts for terms of employment of .five years for the executives and three years for other key personnel in order to keep them in the business and in part to recognize the valued services rendered by the named individuals, for which services they had not been adequately compensated. There was no change in the cash compensation of these employees during the base period years. The conclusion is inescapable that, to some extent at least, the stock bonus represented a part of proper compensation for services rendered by these officers during the four base years, along with and in addition to cash that was paid to them. Normal income for the base period years can not be determined without allowing adequate compensation for officers and key employees. The effect of the majority opinion is to subtract a part of the reasonable allowance for compensation for officers and key employees in order to arrive at normal net income. The result is just the opposite. One arrives by that method at more than normal income and gives the taxpayer an advantage which the statute never intended. The Commissioner recognized all this in allowing the deduction for 1987. While these bonus payments in 1937 might have been abnormal to the extent, if any, that they compensated these men for services rendered outside the base period years, they are not abnormal in so far as they compensated them for services rendered during the base period years,
TURNER agrees with this dissent.