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ability to obtain contracts from all over the world. Mr. Leonard
was dedicated to his work and essential to petitioner's business.
While Mr. Leonard was the driving force behind petitioner, he
was in the process of retiring during the year in issue and reduced
his workload to 7-8 hours a day, 6 days a week. While these hours
are less than he worked in previous years, Mr. Leonard's reduced
workload must be balanced against his 40 years of knowledge and
experience in the industry.
We are mindful that petitioner's sole activity during the year
in issue was to report income, which had previously been earned, on
a contract-completed basis. However, because part of the bonus was
attributable to Mr. Leonard's past services, we consider this fact
unimportant.
Finally, Mr. Leonard personally guaranteed petitioner’s $1.5
million debt to the Royal Bank of Canada. While Mr. Leonard
testified that guaranteeing debts was his normal method of
conducting business, we believe that the personal guaranty further
illustrates Mr. Leonard's importance to petitioner. See Owensby &
Kritikos, Inc. v. Commissioner, supra.
This factor favors petitioner.
(2) External Comparison
This factor compares the employee’s compensation with that paid
by similar companies in similar industries for similar services.
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