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tioner intended to compensate Mr. Ruf for services he performed
for it during its fiscal years ended February 29, 1988, February
28, 1989, and February 28, 1990, when it paid him $2,600,000 in
compensation during its fiscal year ended February 28, 1990.
We shall now analyze and apply herein the relevant factors
identified by the Court of Appeals to determine reasonable
compensation within the meaning of section 162(a)(1).
Role in Company
The first category of factors identified by the Court of
Appeals is the role in the company of the employee whose compen-
sation is at issue. Relevant considerations include the employ-
ee's qualifications, position, hours worked, duties performed,
and general importance to the company's success. Elliotts, Inc.
v. Commissioner, 716 F.2d at 1245-1246.
There is little doubt that Mr. Ruf played a significant role
in returning petitioner to profitability. At the time Mr. Ruf
became petitioner's CEO in March 1986, petitioner was on the
verge of bankruptcy and was not paying its suppliers and other
creditors because it did not have enough cash. As of February
28, 1986, petitioner's net worth was negative $1,514,000.
According to its audited financial statement for its fiscal year
ended February 28, 1986, petitioner's net income after taxes (but
before utilization of net operating loss carryforwards/carry-
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