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This factor tends to show that the compensation at issue was
reasonable.
h. Prevailing Rates of Compensation for Comparable
Positions in Comparable Companies
In deciding whether compensation is reasonable, we compare
it to compensation paid for comparable positions in comparable
companies. Elliotts, Inc. v. Commissioner, 716 F.2d 1241 (9th
Cir. 1983); Mayson Manufacturing Co. v. Commissioner, 178 F.2d
115 (6th Cir. 1949). Scott points out that petitioner's officers
were paid more than the average paid to officers of companies
that responded to the SMACNA and Contractor magazine surveys.
While both surveys have flaws for our purposes, respondent
offered no evidence on salary comparability. We conclude that
this factor tends to show that the compensation was unreasonable.
i. Compensation Paid in Prior Years
An employer may deduct compensation paid in a year even
though the employee performed the services in a prior year.
Lucas v. Ox Fibre Brush Co., 281 U.S. 115, 119 (1930); R.J.
Nicoll Co. v. Commissioner, 59 T.C. at 50-51.
Petitioner's officers testified that petitioner may have
underpaid them in the early years, but that petitioner caught up
at least 10 years before the years in issue. Respondent points
out that petitioner offered no documentary evidence on this
factor; however, respondent offered no evidence that contradicts
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