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The escrow industry is service-oriented and relies heavily
on commission as compensation. Kleindienst was the primary
source of solicited escrows and also generated a significant
percentage of closing fees as compared to petitioner's other
escrow officers combined. As a result, her compensation as a
percentage of net income would logically be high. However, we
are apprehensive about the fact that Kleindienst's compensation
is an extremely high percentage of net income before deducting
her compensation and taxes, 85 percent and 98 percent,
respectively. In addition, Kleindienst admitted that she based
the amount of her bonuses, in part, on the amount of earnings
she wanted petitioner to retain. Thus, we conclude that
Kleindienst's compensation was based on factors other than the
value of her services to petitioner.
E. Internal Consistency
The fifth category of factors provided by the Court of
Appeals in Elliotts, Inc. v. Commissioner, 716 F.2d 1241 (9th
Cir. 1983), is the internal consistency of the company's
treatment of payments to employees. Compensation to
shareholder-employees can prove to be unreasonable when compared
to compensation paid to nonshareholder-employees of the same
company with similar responsibilities. Home Interior & Gifts,
Inc. v. Commissioner, 73 T.C. at 1159. On the other hand, if a
corporation pays salaries at the top of its industry to all of
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