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of reasonable compensation prior to Mr. Sokol's negotiations with
Mr. Bennett on this issue. Mr. Barber testified that he met with
Mr. Bennett on behalf of Mr. Sokol to discuss the relative values
of Messrs. Bennett and Sokol to petitioner. Following this
meeting, it was Mr. Barber's opinion that the services rendered by
Mr. Bennett were more valuable to petitioner than the services
rendered by Mr. Sokol.8 Based on his research, Mr. Barber
recommended several different compensation plans to Mr. Sokol
regarding various methods to allocate compensation between Mr.
Sokol and Mr. Bennett.
Conclusion
Based upon all the facts and circumstances of this case, we
hold that the amounts that petitioner deducted in fiscal years
1989, 1990, and 1991 as compensation to Messrs. Bennett and Sokol
are reasonable. Therefore, petitioner is entitled to deductions
for officer compensation in the amounts claimed.
Decision will be entered
for petitioner.
8We place no reliance on Mr. Barber's opinion other than to
show that Mr. Sokol sought his advice in what appears to be an
arm's-length negotiation over the amount of Mr. Bennett's
compensation.
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