- 22 - by the shareholder's equity for each fiscal year. See Universal Manufacturing Co. v. Commissioner, T.C. Memo. 1994-367 (citing Elliotts, Inc. v. Commissioner, supra at 1245). Petitioner reported the following: Fiscal Taxable Income Shareholder's Return on Year Before NOL’s Equity Investment 1989 $357,932 $1,341,966 26.67% 1990 435,637 1,518,957 28.68% 1991 924,834 2,006,195 46.10% Petitioner's rate of return would satisfy a hypothetical investor. See Elliotts, Inc. v. Commissioner, supra at 1247 (an average return on equity of 20 percent would satisfy an independent investor). This factor favors petitioner. d. Comparison of Amounts Paid by Similar Businesses for Similar Services Evidence that similar companies pay comparable amounts for similar work may indicate that compensation is reasonable. Elliotts, Inc. v. Commissioner, supra at 1246; see Hoffman Radio Corp. v. Commissioner, 177 F.2d 264, 266 (9th Cir. 1949); E. Wagner & Son, Inc. v. Commissioner, supra at 819. Neither party offered any evidence of the compensation that similar corporations pay for services similar to those performed by Dacor and Kadac. Because petitioner bears the burden of proof, Rule 142(a), this factor favors respondent.Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Next
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