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Whether the compensation is reasonable is a question to be
resolved on the basis of an examination of all the facts and
circumstances of the case. Home Interiors & Gifts, Inc. v.
Commissioner, 73 T.C. 1142, 1155 (1980). Respondent's
determination is presumed correct, and petitioner bears the
burden of proving the reasonableness of the compensation. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
In addressing the reasonableness of compensation, courts
have considered a number of factors including: (1) The
employee's qualifications; (2) the nature, extent, and scope of
the employee's work; (3) the size and complexities of the
employer's business; (4) a comparison of salaries paid with the
employer's gross and net income; (5) the prevailing general
economic conditions; (6) a comparison of salaries paid with
distributions and retained earnings; (7) the prevailing rates of
compensation for comparable positions in comparable concerns;
(8) the amount of compensation paid to the particular employee in
previous years; and (9) the salary policy of the employer as to
all employees. Rutter v. Commissioner, 853 F.2d 1267, 1274 (5th
Cir. 1988), affg. T.C. Memo. 1986-407; Owensby & Kritikos, Inc.
v. Commissioner, 819 F.2d 1315, 1323 (5th Cir. 1987), affg. T.C.
Memo. 1985-267; Home Interiors & Gifts, Inc. v. Commissioner,
3(...continued)
be reasonable was paid for services rendered.
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