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the conclusion that hypothetical independent investors would have
been satisfied with the compensation paid to Lynn. We were not
and are not persuaded, however, that the witnesses called by
petitioner in that regard were independent. They were long-
standing friends and admirers of Lynn. In any event, they were
not aware of how the compensation was established and,
apparently, were only consulted about Lynn's compensation in
relation to trial preparation, at which time they had an indirect
interest in the outcome of the case.
The Court of Appeals stated in part: "in this circuit the
independent investor test is not a separate autonomous factor;
rather, it provides a lens through which the entire analysis
should be viewed. See Rapco, Inc., 85 F.3d at 954-55." Dexsil
Corp. v. Commissioner, 147 F.3d at 101. As suggested by
petitioner's expert, an independent investor deciding on the
value of the company would look to what it would take to replace
the current management in terms of comparable salaries. The
hypothetical or independent investor standard does not look
solely to the rate of return but looks to other factors as part
of "the entire tableau." See Rapco, Inc. v. Commissioner, supra
at 954-955, where the Court stated:
We find that the Elliotts' [Elliotts, Inc. v.
Commissioner, 716 F.2d 1241 (9th Cir. 1983)] factors,
examined from the perspective of an independent
investor, are an appropriate standard to evaluate the
reasonableness of employee compensation. These factors
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