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Applying the foregoing requirements, we must decide whether
the corporation has established that it intended to treat the
disallowed corporate payments as compensation for petitioner's
services. The corporation contends that it mistakenly treated
the disallowed corporate payments that were made from the loan
and exchange account as corporate expenses instead of personal
expense payments. It argues that, consistent with its
established practice of treating personal expenses as
compensation to petitioner, the disallowed corporate payments
should be treated as compensation to petitioner. The corporation
argues that its intent is not altered by the fact that the
accountant made a mistake in characterizing the payments.
Additionally, the corporation contends that petitioner generated
all of the income of the corporation and that all of the
disallowed corporate payments therefore should be treated as
compensation to petitioner.
Based on our review of the record before us, we conclude
that the corporation has not established that it intended to
treat the disallowed corporate payments as compensation for
petitioner's services when the payments were made. The
corporation's arguments on brief that the disallowed corporate
payments were characterized incorrectly and that petitioner
generated all of the corporation's income do not establish the
requisite intent to treat the corporate payments as compensation
for petitioner's services. The question is whether the
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