Sunbelt Clothing Company, Inc., f.k.a. Unprinted T-Shirt Warehouse, Inc. - Page 13

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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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