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Commissioner, 102 T.C. 149, 186 (1994); Parker v. Commissioner,
86 T.C. 547, 562 (1986).
Respondent presented the reports and testimony of Francis X.
Burns of the IPC Group, LLC. (IPC). Mr. Burns and IPC specialize
in valuing intellectual property and intangible assets and in
transfer pricing issues.
Mr. Burns chose 11 "peer group" companies and then compared
the net sales, average gross margin, and number of employees of
those 11 "peer group" companies to petitioner. After determining
that Mr. Bennett's position most resembled a chief executive
officer (CEO) and that Mr. Sokol's position most resembled a
chief operating officer (COO), Mr. Burns then compared the CEO's
and COO's of his "peer group" to Messrs. Bennett and Sokol. The
criteria Mr. Burns used to compare Messrs. Bennett and Sokol to
his "peer group" were limited, however, to age, number of years
of industry experience, and various positions held by the
executives. At trial, Mr. Burns testified that he did not
specifically consider whether Messrs. Bennett or Sokol had duties
more expansive than the traditional CEO and COO, nor did he
consider the relative values of each executive to petitioner.
Mr. Burns concluded that a reasonable compensation for Mr.
Bennett would be the average of the interquartile range6 of the
6The interquartile range is the range of values encompassing
the middle 50 percent of a sample group.
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