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d. Larry Deal
Larry Deal (Deal) managed petitioner's planning department
at some time during the years in issue. Petitioner paid Deal
$48,563.19 in 1989, $52,317.61 in 1990, and $54,536.14 in 1991.
e. Jim Faust
Jim Faust (Faust) managed petitioner's planning department
at some time during the years in issue. Petitioner paid Faust
$55,979.29 in 1989, $57,812.14 in 1990, and $60,059.19 in 1991.
3. Management Fees, Sales, Assets, and Taxable Income
Petitioner did not deduct any officer compensation for the
years in issue. Petitioner deducted management fees of $284,300,
$699,359, and $738,239 for fiscal years 1989, 1990, and 1991,
respectively. Petitioner deducted salaries and wages of
$905,321, $1,092,762, and $1,293,692 for fiscal years 1989, 1990,
and 1991, respectively. Petitioner included in costs of goods
sold, labor costs of $2,559,735, $3,048,681, and $3,836,954 for
fiscal years 1989, 1990, and 1991, respectively. Management fees
as a percent of petitioner's salaries, wages, and labor, were
8.21 percent, 16.89 percent, and 14.39 percent in fiscal years
1989, 1990, and 1991, respectively.
Petitioner had sales, assets, and taxable income before
deducting net operating losses and management fees and before
adding to income deductions petitioner concedes are not allowable
(taxable income before certain adjustments) as follows:
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