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remanding T.C. Memo. 1980-282. Since proof of the second prong
(viz., compensatory purpose) can be difficult to establish and a
compensatory purpose can often be inferred if the amount of the
compensation is determined to be reasonable under the first
prong, "courts generally concentrate on the first prong--whether
the amount of the purported compensation is reasonable." Id.
What constitutes reasonable compensation is a question of fact
that must be determined in light of all of the evidence. Pacific
Grains, Inc. v. Commissioner, supra at 605.
Many factors are relevant in determining the reasonableness
of compensation, and no single factor is decisive. Elliotts,
Inc. v. Commissioner, supra at 1245; Pacific Grains, Inc. v.
Commissioner, supra at 606. The U.S. Court of Appeals for the
Ninth Circuit (Court of Appeals) to which an appeal in this case
would normally lie has divided those factors into five broad
categories: (1) The employee's role in the company, (2) a
comparison of the compensation paid to the employee with the
compensation paid to similarly situated employees in similar
companies, (3) the character and condition of the company,
(4) whether a conflict of interest exists that might allow the
company to disguise dividend payments as deductible compensation,
and (5) whether the compensation was paid pursuant to a struc-
tured, formal, and consistently applied program. Elliotts, Inc.
v. Commissioner, supra at 1245-1248.
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