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1971-200. However, it is permissible to pay and deduct
compensation for services performed in prior years. Lucas v. Ox
Fibre Brush Co., 281 U.S. 115, 119 (1930).
a. Compensation for Services in Prior Years
Financial stability was a crucial element in petitioner's
growth strategy. Ginger knew that petitioner would need strong
financial statements and considerable equity in order to work
with the large developers. To this end, Ginger received less
compensation in years prior to the years in issue. Petitioner,
as a result, retained a significant portion of its earnings and
increased its equity base. After petitioner reached its
financial goals and secured a working relationship with the large
developers, petitioner compensated Ginger for the extraordinary
services he provided petitioner from 1984 to 1989.
b. Compensation Paid to Other Employees
Wieder concluded that petitioner's other employees, such as
superintendent, bookkeeper, and administrative assistant, were
all paid above-average compensation from 1986 to 1992 with above-
average pay increases most of those years. Hakala concluded that
petitioner's other employees, specifically Sawhill and Adams,
were undercompensated. Hakala opined that an estimator,
Sawhill's position, would earn $70,000 and up to $100,000 in a
very good year. Included in the $100,000 figure is a bonus of up
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