- 18 -
1949), revg. and remanding a Memorandum Opinion of this Court.
Whether the amount of management fees was reasonable is a
question of fact. American Sav. Bank v. Commissioner, supra;
see Elliotts, Inc. v. Commissioner, supra. Petitioner bears
the burden of proving that the amount of management fees was
reasonable. Rule 142(a). We evaluate the case by considering
the total amount of management fees petitioner seeks to deduct,
not the smaller amounts that Dacor and Kadac paid to various
members of the Cummings family.
If the employee controls the employer, we closely scrutinize
the reasonableness of compensation to see if it was paid for
something other than the employee's services. Owensby &
Kritikos, Inc. v. Commissioner, 819 F.2d 1315, 1322-1324 (5th
Cir. 1987), affg. T.C. Memo. 1985-267; Elliotts, Inc. v.
Commissioner, supra at 1243; Charles Schneider & Co. v.
Commissioner, 500 F.2d 148, 152-153 (8th Cir. 1974), affg. T.C.
Memo. 1973-130; see also Dielectric Matls. Co. v. Commissioner,
57 T.C. 587, 591 (1972). An exploitable relationship may exist
if the employees are the controlling shareholders or if a family
relationship suggests that the compensation plan was not the
result of a free bargain. Elliotts, Inc. v. Commissioner, supra
at 1246; see Pacific Grains, Inc. v. Commissioner, supra at 607;
Harolds Club v. Commissioner, 340 F.2d 861, 865 (9th Cir. 1965),
affg. T.C. Memo. 1963-198. Petitioner and the Cummings did not
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