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deal at arm's-length and the Cummings controlled Dacor, Kadac,
and petitioner. Thus, we will closely scrutinize the
reasonableness of the management fees petitioner paid.
3. Application of the Factors
a. Importance of Dacor and Kadac Employees to
Petitioner
The positions that Dacor and Kadac employees held with
petitioner, their hours and duties, and their importance to the
success of petitioner are relevant to deciding whether management
fees for their services are reasonable. Elliotts, Inc. v.
Commissioner, supra at 1245; American Foundry v. Commissioner,
536 F.2d 289, 291-292 (9th Cir. 1976), affg. in part and revg. in
part 59 T.C. 231 (1972); Home Interiors & Gifts, Inc. v.
Commissioner, 73 T.C. 1142, 1158 (1980).
Mr. and Mrs. Cummings and other members of their family
built petitioner from a small prepress company to a successful
firm. Mr. Cummings testified that petitioner is ranked in the
top 25 of 2,000 prepress companies in the nation. Mr. and Mrs.
Cummings, Deen, and to a lesser extent other Dacor and Kadac
employees contributed to petitioner's success. However, there
are no billing records for those services or records showing how
much time Dacor and Kadac employees spent providing services to
petitioner.
Oregon income tax returns filed by members of the Cummings
family suggest that the Cummings did not provide services to
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