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July 31, 1989, petitioner paid its 21 employees, other than
Kleindienst, a total of $457,291 in salary, commission, and
bonuses; for the year ended July 31, 1990, petitioner paid its 23
employees, other than Kleindienst, a total of $485,306. Thus,
Kleindienst's compensation exceeded the combined compensation of
petitioner's other employees by $127,419 and $79,494,
respectively.
Respondent determined $142,852 and $156,610 as reasonable
compensation for Kleindienst for taxable years ended July 31,
1989 and July 31, 1990, respectively, and disallowed petitioner's
claimed deductions for the excess. At trial, respondent conceded
that compensation of approximately $300,000 per year would be
reasonable.
OPINION
Before addressing the reasonableness of Kleindienst's
compensation, we consider the admissibility of two stipulated
exhibits offered by respondent. The first exhibit is a published
survey of owners' compensation; the second is a published survey
of executive compensation. Petitioner raised two objections to
the exhibits. In the stipulation of facts, petitioner reserved
hearsay objections. No testimony at trial involved the exhibits,
but respondent relied on the exhibits in its brief. Petitioner
did not renew the hearsay objections or discuss them in its
initial or reply briefs. Therefore, we consider the hearsay
objections reserved in the stipulation of facts abandoned.
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