Sunbelt Clothing Company, Inc., f.k.a. Unprinted T-Shirt Warehouse, Inc. - Page 30

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               In determining whether an arm's-length negotiation occurred            
          between petitioner and Messrs. Bennett and Sokol, we find the               
          comparison between Messrs. Bennett's and Sokol's shareholding               
          percentages and their respective compensations most persuasive.             
          Messrs. Bennett and Sokol, although equal shareholders, received            
          the following percentages of total officer salary:                          

          FYE         Mr. Bennett          Mr. Sokol                                  
          7/30/89      83.55 percent       16.45 percent                              
          7/29/90      75.19 percent       24.81 percent                              
          7/28/91      75.19 percent       24.81 percent                              
          8/02/92     100.00 percent            N/A                                   

               Messrs. Bennett and Sokol each owned 50 percent of petitioner.         
          Each was a board member with equal control.  Messrs. Bennett and            
          Sokol were not in any way related to one another and had no                 
          incentive or outside pressures to pay the other any amount other            
          than that which was fair and reasonable to petitioner.                      
          Nevertheless, the amount of compensation paid to Messrs. Bennett            
          and Sokol was not in proportion to their shareholdings.  Respondent         
          has stipulated that petitioner's redemption of Mr. Sokol's shares           
          was not tied to his compensation.  Based on all the facts, it is            
          reasonable to conclude that Messrs. Bennett's and Sokol's                   
          compensation was bargained for at arm's length and was not a                
          disguised dividend.  See Owensby & Kritikos, Inc. v. Commissioner,          
          supra at 1326.  Indeed, Mr. Sokol sought the advice of his personal         
          certified public accountant, Mr. Gene Barber, regarding the issue           

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