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decided that petitioner would pay these debts in the taxable year
ended July 31, 1985.
5. Petitioner's Employees
Petitioner employed many individuals to buy and sell
electronic components. Most of petitioner's employees did not
have prior experience in the electronics industry before they
commenced their employment with petitioner. The Officers taught
petitioner's new employees to be traders by sitting next to them,
having the new employees watch them, and answering the new
employees' questions. After a while, the new employees were
given simple tasks to do on their own, and if they performed
those tasks correctly, the new employees were given a few
well-established accounts to manage in order to develop their
trading skills. From 1980 through 1984, approximately eight
individuals terminated their employment with petitioner (or
Components) in order to start a competing businesses.
Petitioner also employed several individuals to support its
sales and purchasing operations. Petitioner's support staff
ranged from one to three employees in the shipping and receiving
department, one to two secretaries, a bookkeeper, and an
individual to perform administrative functions.
a. Compensation of Petitioner's Employees
Petitioner generally paid its employees a rate of
compensation which the Officers thought was commensurate with
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