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1. Employee's Qualifications
An employee's superior qualifications for his or her
position with the business may justify high compensation. Home
Interiors & Gifts, Inc. v. Commissioner, 73 T.C. 1142, 1158
(1980). Respondent concedes that Choate was highly qualified for
his position with petitioner. This factor favors petitioner.
2. Nature and Scope of Employee's Work
The duties performed by the employee, the hours worked, and
the importance of the employee to the success of the company may
justify high compensation. Rutter v. Commissioner, supra; Mayson
Manufacturing Co. v. Commissioner, supra.
Respondent concedes that Choate contributed significantly to
petitioner's success but contends that Dudley, Freese, and
Barrett contributed as much as Choate to petitioner's success.
We disagree. Choate was clearly more important to petitioner
than anyone else. Reynolds, a surety bond agent, knew Choate,
Barrett, Freese, and Dudley professionally. He testified that
Choate had a much greater ability than Barrett, Freese, or Dudley
to develop petitioner.
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