-19-
past and present duties and salary payments. Elliotts, Inc. v.
Commissioner, supra at 1245.
Whether an employee has personally guaranteed his employer’s
debt is also a factor to be examined in this context. In some
instances, an employee’s personal guaranty of his employer’s debt
may entitle the employer to compensate the employee with additional
salary. Owensby & Kritikos, Inc. v. Commissioner, 819 F.2d 1315,
1325 n.33 (5th Cir. 1987), affg. T.C. Memo. 1985-267; Acme Constr.
Co. v. Commissioner, T.C. Memo. 1995-6; BOCA Constr. Inc. v.
Commissioner, T.C. Memo. 1995-5.
The history of Mr. Leonard's contributions to petitioner must
be considered, rather than just his contributions during the year
in issue, because the compensation petitioner paid to Mr. Leonard
during the year in issue represents, in part, an attempt to rectify
prior undercompensation. Respondent readily admits that Mr. Leonard
was petitioner's key employee and the main reason for its success.
As president, he was the driving force behind the business from its
inception, and his personal services were almost single-handedly
responsible for its success. Mr. Leonard developed cost-effective
methods of double jointing and coating that gave petitioner a
competitive advantage in the pipeline construction industry. His
contacts and experience contributed to petitioner's business by his
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