- -22
Petitioner's other witness, Mr. Stephen Gross, similarly
examined the "reasonableness" of petitioner's figures by adding
up the salaries of full-time positions for each of the different
roles Mr. Haviv performed. Finding no actual competitors of
petitioner, Mr. Gross also placed improper reliance upon the RMA
survey used by respondent.
Employer's Salary Policy as to All Employees
Courts have considered salaries paid to other employees of a
business in deciding whether compensation is reasonable. Home
Interiors & Gifts, Inc. v. Commissioner, 73 T.C. at 1159. We
look to this factor to determine if Mr. Haviv was compensated
differently than petitioner's other employees solely because of
his status as a shareholder.
Mr. Haviv earned $601,077 in 1991 and $603,269 in 1992
compared to petitioner's second highest paid employee who made
$71,409 and $76,572, respectively. In 1991, the total
compensation for petitioner's nonstockholder employees totaled
$244,933. Mr. Haviv's total compensation was 2.4 times the total
compensation for all of petitioner's nonshareholder employees
combined. In 1992, Mr. Haviv's total compensation was 2.1 times
the total compensation of all of petitioner's nonshareholder
employees.
A reasonable, longstanding, and consistently applied
compensation plan negotiated at arm's length, often provides
evidence that compensation paid pursuant to that plan is
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