- 33 -
entitle the employer to pay a greater salary to the employee than
the employer would otherwise have paid. See Owensby & Kritikos,
Inc. v. Commissioner, 819 F.2d at 1325 n.33; R.J. Nicoll Co. v.
Commissioner, supra at 51; see also Acme Constr. Co. v.
Commissioner, T.C. Memo. 1995-6; BOCA Constr. Inc. v.
Commissioner, T.C. Memo. 1995-5.
The Officers guaranteed the repayment of $500,000 that
petitioner borrowed from the First National Bank of Long Island
on June 20, 1984. Thus, at first blush, this factor would appear
to favor petitioner. We bear in mind, however, that the $500,000
proceeds were lent to the Officers by petitioner interest free,
immediately after petitioner received these funds from the bank.
The fact that the Officers received an interest-free loan from
petitioner negates the fact that the Officers guaranteed the
debt. This factor favors neither party. We consider it neutral.
n. Absence of Pension Plan/Profit-Sharing Plan
Courts have considered the absence of a pension plan or a
profit-sharing plan in determining reasonable compensation.
Rutter v. Commissioner, 853 F.2d 1267, 1274 (5th Cir. 1988),
affg. T.C. Memo. 1986-407; Kennedy v. Commissioner, 671 F.2d at
174-175. Such an absence may allow the employer to pay the
employee more compensation than the employer would have paid had
the employer offered the employee a pension plan or a profit-
sharing plan. Rutter v. Commissioner, supra at 1274.
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