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whether a conflict of interest exists that might permit the company
to disguise dividend payments as deductible compensation; and (5)
whether the compensation was paid pursuant to a structured, formal,
and consistently applied program. No single factor is dispositive.
Pacific Grains, Inc. v. Commissioner, supra at 606.
Respondent essentially posits that Mr. Leonard was regularly
and fully compensated through petitioner's affiliated entities for
the services he performed. Mr. Leonard controlled his means of
compensation, using whatever method was most tax advantageous. In
fact, respondent argues, Mr. Leonard treated the various companies
as his personal pocketbook. Further, petitioner declared dividends
over the years, which also benefited Mr. Leonard. Respondent argues
that the 1987 payment to Mr. Leonard was not intended to compensate
him for personal services, but rather to remove capital from
petitioner because of Mr. Leonard's imminent retirement.
Respondent thus argues that the $1,777,800 petitioner deducted
as compensation for its fiscal year 1987 is not reasonable and that
Mr. Leonard was not undercompensated in prior years. Respondent
contends (at trial and on brief) that petitioner is not entitled to
deduct more than $160,710 as total compensation for 1987. However,
respondent alternatively argues that should the Court determine that
Mr. Leonard was also entitled to a retirement benefit, then
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