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"peer group" CEO's, or $482,807, $532,621, and $622,714 for
fiscal years 1990, 1991, and 1992, respectively. Using similar
techniques, Mr. Burns provided estimates of Mr. Sokol's
reasonable compensation for fiscal years 1990 and 1991 of
$354,163 and $382,330, respectively.
Relying on Mr. Burns' report, respondent essentially argues
that Messrs. Bennett and Sokol are entitled to no more than the
industry average. We do not find this argument persuasive. The
regulations promulgated under section 162(a)(1) direct a
comparison of salaries paid by similar businesses to similar
employees under similar circumstances. Sec. 1.162-7(b)(3),
Income Tax Regs. However, section 162 is "not designed to
regulate businesses by denying them a deduction for the payment
of compensation in excess of the norm" in cases where other
factors call for higher compensation. Home Interiors & Gifts,
Inc. v. Commissioner, 73 T.C. at 1162.
Respondent also introduced the report and testimony of
Sigmund Wesolowski. Mr. Wesolowski was the former president of
Pandora, Inc. (Pandora), a manufacturer, seller, and distributor
of sportswear. Respondent argues that Pandora and petitioner
were similar companies and that Mr. Wesolowski and Mr. Bennett
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