O.S.C. & Associates, Inc. d.b.a. Olympic Screen Crafts - Page 9

                                        - 9 -                                         
          bad debts adjustment to Mr. Blazick's 1992 allocation.  Mr. Rosi            
          offered no explanation for these apparent manipulations.                    
               Finally, the most persuasive evidence of petitioner's lack             
          of compensatory intent is the plan itself.  Consistent with the             
          existence of disguised dividends, the plan applied only to                  
          petitioner's shareholders, Messrs. Blazick and Richter, and                 
          payments were expressly calculated with reference to their                  
          proportion of stock ownership.  See Elliotts, Inc. v.                       
          Commissioner, supra at 1246-1247 & nn. 4, 7.  Moreover, the plan            
          does not use the value of services rendered as the basis for                
          calculating the amount of compensation, but merely distributes              
          excess profits to Messrs. Blazick and Richter.                              
               Generally, incentive compensation plans are designed to                
          increase the compensation to employees by some fraction of the              
          benefit the corporation derives from the employees' efforts.  See           
          Elliotts, Inc. v. Commissioner, supra at 1248 (stating that                 
          "Incentive payment plans are designed to encourage and compensate           
          that extra effort and dedication which can be so valuable to a              
          corporation."); cf. Kennedy v. Commissioner, 671 F.2d 167 (6th              
          Cir. 1982), revg. 72 T.C. 793 (1979) (concerning incentive                  
          compensation equal to 52 percent of net profits); PMT, Inc. v.              
          Commissioner, T.C. Memo. 1996-303 (concerning incentive                     
          compensation equal to 10 percent of the increase in sales over              
          the previous year's sales).  As the benefit to the corporation              
          increases, the compensation to the employee increases.                      

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