- -22
The RMA study that Mr. Blumberg relied on was a collection
from lending institutions that came from bank and creditor loan
records. It was not designed to be used as a survey of
compensation. An important weakness of the RMA study is that it
supplies the amount of total officers' compensation, but does not
supply information regarding the number of officers or their
duties.
The testimony of none of the witnesses in this case offered
as experts is helpful in resolving the issue of the
reasonableness of salaries paid by petitioner.
While the record contains some evidence of the character and
condition of petitioner during the year here in issue, there is
little in the record to show the complexities of petitioner's
business as compared to other companies. There is evidence that
in the year here in issue petitioner's sales and profits
increased dramatically, but that this situation did not carry
over to later years.
Finally, it is clear that petitioner's sole shareholders
were in a position to determine the amount of their compensation
without reference to the amount which would be paid for similar
work in an arm's-length transaction. See Spicer Accounting, Inc.
v. United States, 918 F.2d 90, 92 (9th Cir. 1990); Nor-Cal
Adjusters v. Commissioner, 503 F.2d 359 (9th Cir. 1974), affg.
T.C. Memo. 1971-200.
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