- -29 is nothing in this record to show directly the percent of sales of the cotton/Lycra fabric that Mr. Penalba would have received in an arm's-length transaction because he was the developer of the fabric. However, some of petitioner's salesmen were paid a commission of 4 percent for their selling activities. Based on this fact, we conclude that in an arm's-length transaction petitioner would have paid Mr. Penalba approximately 4 percent of the sales of cotton/Lycra fabric in its fiscal year 1990, and hold that this amount would be $400,000. We, therefore, hold that total reasonable compensation to Mr. Penalba by petitioner in its fiscal year 1990 is $1,071,200. The record shows that Mrs. Penalba worked 60 to 80 hours a week, but does not show any other extraordinary contribution she made to petitioner. In fact, from her testimony it appears that she was not knowledgeable with respect to some of petitioner's activities about which a chief financial officer would be expected to be knowledgeable. There is nothing in this record to indicate that reasonable compensation for Mrs. Penalba would be in excess of the amount determined by respondent, except the testimony of respondent's expert witness that reasonable compensation for Mrs. Penalba was $209,520 for petitioner's fiscal year 1990. For reasons heretofore stated, we do not accept the opinion of respondent's expert because of its being based on noncomparable data. However, we shall accept the $209,520 as reasonable compensation for Mrs. Penalba's servicesPage: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Next
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