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She did not receive the 10-percent escrow closing commission for
escrows she personally closed. Nor did she receive a stated
percentage of the fees generated from escrows that she solicited.
Kleindienst determined the amount of her own compensation, as
well as the compensation for petitioner's other employees, with
the assistance of West and Kleindienst's husband. They based
Kleindienst's salary and bonuses on current and anticipated
revenue, the percentage increase in gross revenue, Kleindienst's
compensation as a percentage of gross revenue, and the amount of
earnings petitioner desired to retain, as well as Kleindienst's
skill, hours, and the number of escrows she solicited and closed.
Petitioner set Kleindienst's base salary at the beginning of each
fiscal year and paid her bonuses throughout the year. Petitioner
did not have a pension or profit-sharing plan for any of its
employees.
Kleindienst set compensation for petitioner's other
employees in the same manner that she determined her own
compensation. Petitioner paid each employee, besides
Kleindienst, a salary and a bonus at the end of the calendar
year. The amount of the bonus depended on the employee's
position and length of employment and ranged from about $110 to
$1,200.3 In addition, it paid the escrow officers the 10-percent
closing commission on escrows they closed. For the year ended
3 One employee received unexplained bonuses throughout
taxable year 1989 totaling about $8,600.
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