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Petitioner is a closely held corporation, the principal
place of business of which was in Ohio when it filed its
petition.
The primary issue in the underlying case, Boca Constr., Inc.
v. Commissioner, T.C. Memo. 1995-5, filed January 9, 1995, was
whether petitioner may deduct as reasonable compensation amounts
it paid to its officers in the years in issue. Petitioner
deducted as compensation for its officers $689,600 for 1989 and
$817,500 for 1990. Respondent's revenue agent examined
petitioner's return and investigated this case. Respondent
determined that the amount of compensation petitioner paid to
its officers in the years in issue was unreasonable. Respondent
relied on facts obtained by the revenue agent and reports from
Robert Morris Associates (RMA) and the Occupational Outlook
Handbook to determine reasonable compensation.
In the notice of deficiency, the answer, at trial, and on
brief, respondent's position was that reasonable compensation for
petitioner's officers was $274,000 in 1989 and $282,000 in 1990.
Respondent did not call any witnesses at trial. We held that the
compensation petitioner paid to its officers was reasonable.
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