- -9
Mr. Haviv's Percentage of
Gross Revenue Compensation Gross Revenue
1988 $3,914,409 $151,000 3.9%
1989 4,684,286 123,000 2.6%
1990 4,740,731 135,000 2.9%
1991 6,495,378 601,077 9.3%
1992 7,009,772 603,269 8.6%
In 1992, the compensation paid to Mr. Haviv was greater than
petitioner's net income (before deduction for Mr. Haviv's
compensation). Mr. Haviv's compensation as a percentage of
petitioner's taxable income for 1988-92 before the deduction for
Mr. Haviv's compensation amounted to:
Net Income Percentage of Net Income
(before deduction (before deduction
for Mr. Haviv's Mr. Haviv's for Mr. Haviv's
Compensation) Compensation Compensation)
1988 $186,208 $151,000 81%
1989 157,044 123,000 78%
1990 165,883 135,000 81%
1991 685,988 601,077 88%
1992 470,991 603,269 128%
The Prevailing Rates of Compensation for Comparable
Positions in Comparable Concerns
Respondent used Robert Morris Associates (RMA) Annual
Statement Studies to determine Mr. Haviv's reasonable
compensation for 1991 and 1992 to be $207,852 and $224,313
respectively. The RMA Study was based upon the financial
statements of 10 wholesale jewelers with $5 to $10 million in
annual sales. The RMA survey for 1991 divided the officer
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