- 26 - competency and value to the company of a CEO. It is the accomplishments of the executive and not necessarily the hours worked, although the working of long hours is to be considered. Again, petitioner cites the responsibility for BI's success and "irreplaceability" of Mr. Schoenecker. While Mr. Schoenecker would certainly be a great loss to the company were he not there, it is fairly clear from this record that there are other competent officers of BI, such as Mr. Shaw and, during the latter years here in issue, Mr. Schoenecker's son Larry was taking more responsibility for the business. However, the fact that there are other competent officers employed by BI does not detract from the fact that Mr. Schoenecker is a very competent CEO. Petitioner points out that the growth, profitability, and financial condition of the business are important in determining whether compensation paid to an employee is reasonable. Home Interiors & Gifts, Inc. v. Commissioner, 73 T.C. 1142, 1157-1158 (1980). The record here shows that BI has grown substantially since its incorporation in 1950. Certainly that growth is to an appreciable extent due to the work of Mr. Schoenecker. However, unlike the situation in Home Interiors & Gifts, Inc. v. Commissioner, supra, the growth of BI was in line with that of BI's competitors. Petitioner contends that an unrelated investor would be satisfied with the return on his investment in BI from the income of BI after the payment of Mr. Schoenecker's salary. RespondentPage: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Next
Last modified: May 25, 2011