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Searing each received equal amounts of the net profits from
Summit Supply Co.
Chasin, Hanson, and Searing owned North County Builders with
Sherman and Harris (neither of whom is otherwise described in the
record). North County Builders was developing an apartment house
project in the year in issue.
C. Bonuses Paid to Chasin, Hanson, and Searing
1. Petitioner's Bonus Payment Procedures
Petitioner authorized bonuses each year for its officers for
their services. Petitioner's board of directors (Chasin, Hanson
and Searing) authorized the bonuses to be paid when petitioner's
cash position reasonably permitted, but not later than September
15 of each taxable year from 1966 to 1986 except 1971 and 1972.
In taxable years 1971 and 1972, petitioner's board of directors
authorized an approximate amount for a combined salary and bonus
for each officer.
Chasin, Hanson, and Searing met each year to consider
factors such as petitioner's success, development, profits,
needs, and tax considerations and their own tax considerations in
deciding the amount of the bonuses. Chasin, Hanson, and Searing
agreed unanimously on the amounts of their bonuses each year,
including the year in issue. Each year, Chasin, Hanson, and
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