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services. Sec. 1.162-7(a), Income Tax Regs. Although framed as
a two-prong test, the inquiry under section 162(a)(1) has
generally turned on whether the amounts of the purported
compensation payments were reasonable. Elliotts, Inc. v.
Commissioner, 716 F.2d 1241, 1243-1244 (9th Cir. l983), revg. and
remanding T.C. Memo. 1980-282. What constitutes reasonable
compensation to a corporate officer is a question of fact to be
determined on the basis of all the facts and circumstances of a
case. Pacific Grains, Inc. v. Commissioner, 399 F.2d 603, 605
(9th Cir. 1968), affg. T.C. Memo. 1967-7. Petitioner has the
burden of proving that the payments to Ginger were reasonable.
Rule 142(a). Respondent has conceded that petitioner is entitled
to a deduction for compensation paid to Ginger in the amounts of
$300,000 and $209,873 for the fiscal years 1990 and 1992,
respectively.
Many factors are relevant in determining the reasonableness
of compensation, and no single factor is decisive. Mayson
Manufacturing Co. v. Commissioner, 178 F.2d 115, 119 (6th Cir.
1949), revg. a Memorandum Opinion of this Court. The Court of
Appeals for the Ninth Circuit has divided the factors relevant to
the reasonable compensation determination into the following five
broad categories for analytical purposes.
1. Roles in Company
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