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that their own bonuses were based on their work, not on their
stock ownership. Dudley and Freese were inconsistent on this
point. Choate, who made the decision, was not.
Respondent contends that the facts here are like those in
Nor-Cal Adjusters v. Commissioner, T.C. Memo. 1971-200, affd. 503
F.2d 359 (9th Cir. 1974). We disagree. In Nor-Cal Adjusters,
unlike in this case: (1) Bonuses were paid only to officer-
shareholders and not to nonshareholder employees who did work
similar to that done by officer-shareholders; (2) bonuses were
exactly proportionate to stock ownership; and (3) the taxpayer's
compensation plan was not based on a percentage of billings as
were those of other independent insurance adjusting firms.
Respondent contends that this case is similar to Pacific
Grains, Inc. v. Commissioner, 399 F.2d 603, 607 (9th Cir. 1968),
affg. T.C. Memo. 1967-7. We disagree. In Pacific Grains, Inc.
v. Commissioner, supra at 606-607, unlike this case: (1) The pay
at issue did not include catchup pay for prior services, and (2)
the taxpayer did not pay dividends and had no reason to
accumulate earnings and not to pay dividends.
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