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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.
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