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1241, 1245-1247 (9th Cir. 1983), revg. and remanding T.C. Memo.
1980-282, the Court of Appeals for the Ninth Circuit divided the
factors into five broad categories, to wit, the employee’s role
in the company; comparison of the employee’s salaries with those
paid by similar companies for similar services; the character and
condition of the company, including the complexities of the
business and general economic conditions; factors indicating a
conflict of interest, such as the employee’s shareholder status;
and internal consistency in a company’s treatment of payments to
employees. No single factor is determinative. Pacific Grains,
Inc. v. Commissioner, 399 F.2d 603, 606 (9th Cir. 1968), affg.
T.C. Memo. 1967-7; Home Interiors & Gifts, Inc. v. Commissioner,
73 T.C. 1142, 1156 (1980). When the case involves a closely held
corporation with the controlling shareholders setting their own
level of compensation as employees, the reasonableness of the
compensation is subject to close scrutiny. Owensby & Kritikos,
Inc. v. Commissioner, supra; Elliotts, Inc. v. Commissioner,
supra at 1246.
Respondent relies on Maggio Bros. Co. v. Commissioner, 6
T.C. 999, 1006 (1946), and contends that the bonuses in question
were not paid during petitioner’s 1990 tax year. Respondent
argues that the payments by checks dated June 29, 1990, and
immediate loans back to petitioner “lacked economic substance and
were entered into solely for tax-avoidance purposes.” Respondent
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