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Year Base Salary Bonus
1987 $75,000 25% of pre-tax profit
1988 300,000 25% of pre-tax profit
1989 500,000 50% of pre-tax profit
1990 1,000,000 50% of pre-tax profit
Rogers' salary and bonus percentage were reflected in
petitioner's corporate minutes at the beginning of each year.
For 1990, Rogers gave himself a large base salary increase
($500,000 to $1 million) to compensate himself for turning down
the 1984 California job offer. For 1986 through 1990, Rogers'
compensation compared to the total paid to other employees,
petitioner's taxable income, petitioner's gross receipts, and the
percentage of gross receipts which his compensation made up was
as follows:
Rogers' Other
Year Compensation Employees Taxable Income Gross Receipts % of Gross
Receipts
1986 $66,943 $220,273 $138,012 $848,4037.8
1987 75,914 317,562 240,063 1,196,8496.0
1988 431,702 595,141 620,313 2,542,91216.9
1989 928,883 1,054,281 1,743,853 4,993,76118.6
1990 4,439,180 1,636,264 2,432,253 9,880,76044.9
During the years 1986 through 1990, petitioner did not have
pension plans or other forms of deferred compensation for Rogers
or other key employees. Petitioner paid dividends to Rogers, its
sole shareholder, of $1,000 in 1989, $1,500 in 1990, and $5,500
in 1991. Rogers is the only person who had authority to declare
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