Chen

I. Introduction

The Franchise Tax Board (board) appeals from a judgment partially refunding corporate franchise taxes, penalties, and interest paid by Roy Chen on behalf of Valuable Properties, Inc. (VP). The judgment was in favor of Mr. Chen as the successor in interest to VP, a dissolved corporation. Prior to its dissolution, Mr. Chen was the president and a shareholder of VP. At issue was a deduction by VP for a compensation expense on its 1981 tax return, which was filed in 1984. The matter was tried by the court without a jury on stipulated facts, oral testimony, and documentary evidence. The board contends Mr. Chen was required to pay, in full, the accrued interest as well as the tax itself as a condition precedent to judicial review of his refund claim. Further, the board contends the expense in question was deferred compensation and therefore was not deductible by VP until it was paid. In the published portion of the opinion, we conclude payment of interest is not a jurisdictional prerequisite to judicial review of a tax refund claim brought before the board. Further, in the unpublished portion of the opinion, we reject the board’s remaining contention concerning…