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tioner's stores attractive and clean places in which to shop.
Rather than lowering prices, he increased petitioner's profit
margins by, inter alia, increasing petitioner's inventory turn-
over rate, sales per stores, and sales per employee.
Not only did Mr. Ruf refocus petitioner's retail stores, he
also refocused its wholesale lumber business. Prior to his
becoming petitioner's CEO, petitioner's wholesale lumber business
was primarily dependent on internal sales to its retail home
center stores. Under Mr. Ruf's direction, the wholesale lumber
business focused on selling lumber to third parties. As a result
of those efforts, petitioner became the largest supplier of
lumber to the movie studios in southern California, the largest
supplier of all vertical-grain Douglas fir to sash and door
manufacturers, and the largest industrial wholesaler of upper-
grade pine in the United States.
External Comparison
The second category of relevant factors identified by the
Court of Appeals is a comparison of the employee's compensation
with that paid by similar companies in similar industries for
similar services. Elliotts, Inc. v. Commissioner, supra at 1246;
see sec. 1.162-7(b)(3), Income Tax Regs.
For purposes of making external comparisons, both parties
rely on the opinions of experts. We evaluate the opinions of an
expert in light of such expert's qualifications and all other
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