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highly technical or complex, that it paid compensation for
services provided in prior years, and that its CEO had managerial
skills unique to its industry, had founded a firm that became
very successful in 3 years, or worked an inordinate number of
hours.
14. Conclusion
We conclude that the amount of compensation that petitioner
paid to Choate in 1992 was reasonable.
D. Whether Payments to Choate Were for Services
To be deductible, compensation must be purely for services.
Sec. 162(a)(1); Rutter v. Commissioner, 853 F.2d at 1271; Owensby
& Kritikos, Inc. v. Commissioner, 819 F.2d at 1322-1323.
There is no question that Choate rendered services to
petitioner. However, respondent contends that petitioner's
payments to Choate were disguised dividends and were not purely
for services. Respondent points out that Dudley and Freese
testified that they believed their bonuses for 1992 were based on
stock ownership; that Dudley, Freese, and Barrett each received
$65,000 bonuses and Choate received a $935,000 bonus; and that
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