Max Burton Enterprises, Inc. - Page 13

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          acknowledges that, because this argument was not set forth in the           
          statutory notice, respondent bears the burden of proof on this              
          issue.  We are not persuaded that the evidence in the record                
          supports the conclusion that bonuses were not actually paid                 
          during the tax year in issue.  Respondent has not proven that               
          this case is comparable to Maggio Bros. Co. v. Commissioner,                
          supra at 1006, where “the stockholders had no intention of                  
          receiving the proceeds of the bonus checks as salary payments in            
          the respective taxable years”.  Id.  We do, however, consider the           
          facts concerning those transactions as part of our analysis of              
          whether the compensation deducted by petitioner was reasonable.             
               A second area of dispute between the parties is whether the            
          bonuses that were paid for the fiscal year ended in 1990 were               
          intended to compensate the recipients of those bonuses for                  
          undercompensation in earlier years.  Ms. Burton, Mr. Burton, and            
          Denovan each testified credibly that they accepted minimal                  
          compensation in the early developmental years in anticipation               
          that their efforts would be rewarded in later years.  We are                
          persuaded that the bonuses that were paid in June 1990 were                 
          intended in part to compensate for undercompensation in earlier             
               Petitioner must also prove that its executive employees were           
          in fact undercompensated in earlier years.  Respondent argues               
          that the executives were not undercompensated in earlier years              

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