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9. Petitioner's Compensation Policy for All Employees
Courts have considered the taxpayer's compensation policy
for other employees of the business in deciding whether
compensation is reasonable. Mayson Manufacturing Co. v.
Commissioner, 178 F.2d at 119; Home Interiors & Gifts, Inc. v.
Commissioner, 73 T.C. at 1159. This factor focuses on whether
the entity pays top dollar to all of its employees, including
both shareholders and nonshareholders. Owensby & Kritikos, Inc.
v. Commissioner, supra at 1329-1330.
Petitioner paid Choate at the high end of the compensation
range. Petitioner points out that its project managers and
superintendents often make more from bonuses (which are based on
performance) than they do from salaries, but petitioner presented
no evidence that its other employees were paid at or near the
high end of the compensation range. Cf. Home Interiors & Gifts,
Inc. v. Commissioner, supra at 1159-1160.
This factor favors respondent.
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