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capital base in order to satisfy the demands of the large
developers. Increasing petitioner's capital base in the early
years was central to petitioner's ability to penetrate the
residential masonry market. Indeed, the percentage return-on-
equity figures for the years 1985 through 1989 indicate that
petitioner could have paid additional officer compensation and
maintained a satisfactory return on equity. Under these
circumstances, isolating the return-on-equity figure for the
fiscal year ended June 30, 1990, would ignore petitioner's
successful corporate strategy and the steps taken to implement
that strategy.
The percentage return-on-equity figures for the years 1991
and 1992 must be viewed in light of the precipitous drop in the
residential housing market in late 1990. Given the severity of
that economic decline, the return-on-equity figures are not a
good indicator of petitioner's performance or the reasonableness
of compensation that petitioner paid Ginger.
5. Internal Consistency
Internal inconsistency in petitioner's treatment of payments
to employees may indicate that the payments to Ginger were not
reasonable. Elliotts, Inc. v. Commissioner, 715 F.2d at 1247.
Bonuses that have not been awarded under a formal and
consistently applied program are suspect. Nor-Cal Adjusters v.
Commissioner, 503 F.2d 359, 362 (9th Cir. 1974), affg. T.C. Memo.
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