PMT, INC. - Page 21

                                        -  -21                                           
          that manufacture knitted fabric require less capital investment,            
          yet the personal vision and talent of management is more                    
          important.  Mr. Blumberg concluded that the knit goods industry             
          is dominated by small-scale entrepreneurs who are successful if             
          they are able to anticipate fashion trends and quickly produce              
          goods to meet emerging demands.                                             
               In comparison with the data provided by the RMA, Mr.                   
          Blumberg determined that petitioner had greater gross profit,               
          return on owner's equity based on profit before taxes (by a                 
          factor of 1,300 percent), and return on total assets (by a factor           
          of 562 percent) than the RMA reported data.                                 
               Mr. Blumberg also provided two comparables from clients from           
          his accounting practice in the southern California area.                    
          However, when Mr. Blumberg refused to supply the names or any               
          information about the business of these clients, the Court stated           
          that this evidence would not be considered, since respondent had            
          no way of verifying the data.  Mr. Blumberg had few                         
          qualifications as an expert on reasonable salaries.  Mr. Blumberg           
          has had a close association with petitioner for a number of                 
          years.  Mr. Blumberg served as petitioner's accountant during the           
          year at issue and for a number of other years.  While Mr.                   
          Blumberg had a few college courses that dealt with reasonable               
          salaries for corporate officers, he had no history of recognized            
          expertise in compensation matters.                                          






Page:  Previous  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  Next

Last modified: May 25, 2011