38
1986-87. However, we will use Mr. Brennan's conclusions only
against respondent, as a tacit concession that Mr. Munro was
entitled to be paid $300,000. Cf. Guy Schoenecker, Inc. v.
Commissioner, supra.
Thus, this factor favors petitioners, but only to the extent
described above.
(c) Character and Condition of Company
The focus here is on the company's size as indicated by its
sales, net income, or capital value, and on the complexities of
the business and general economic conditions. Elliotts, Inc. v.
Commissioner, 716 F.2d at 1246.
The parties agree that Alondra and UCIC were operating at a
profit in 1987 but showed no particularly great growth. However,
petitioners argue that Mr. Munro should have been credited with
and compensated for petitioners' allegedly great growth in
previous years and point to Allison Corp. v. Commissioner, T.C.
Memo. 1977-166, where deferred compensation for earlier years'
work was allowed.
Under certain circumstances, prior services may be
compensated in a later year. Lucas v. Ox Fibre Brush Co., 281
U.S. 115, 119-120 (1930); American Foundry v. Commissioner, 59
T.C. 231, 239 (1972), affd. in part and revd. in part on other
grounds 536 F.2d 289 (9th Cir. 1976). However, the taxpayer must
establish that compensation in the prior periods was insufficient
and that the current year's compensation was intended to
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