- 7 -
116, 120 (5th Cir. 1992), affg. in part and revg. in part T.C.
Memo. 1991-189; Estate of Perry v. Commissioner, 931 F.2d 1044,
1046 (5th Cir. 1991); Powers v. Commissioner, supra at 471.
The taxpayer need not show bad faith to establish that the
Commissioner's position was not substantially justified for
purposes of a motion for litigation costs under section 7430.
Estate of Perry v. Commissioner, supra; Powers v. Commissioner,
supra.
b. Respondent's Basis in Fact
Respondent's position in Boca Constr., Inc. v. Commissioner,
supra, was that the compensation petitioner paid to its officers
of $689,600 for 1989 and $817,500 for 1990 was unreasonable and
that compensation of not more than $274,000 for 1989 and $282,000
for 1990 would have been reasonable. Whether compensation is
reasonable is a question of fact. Botany Worsted Mills v. United
States, 278 U.S. 282, 289-290 (1929); Trinity Quarries, Inc. v.
United States, 679 F.2d 205, 210 (11th Cir. 1982); Estate of
Wallace v. Commissioner, 95 T.C. 525, 553 (1990), affd. 965 F.2d
1038 (11th Cir. 1992).
Petitioner points out that in Boca Constr., Inc. v.
Commissioner, T.C. Memo. 1995-5, we considered 12 factors in
deciding whether compensation was reasonable. We concluded that
eight favored petitioner and four were neutral. However, we
believe that respondent's position had a basis in fact because
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