- 17 -17
and 1992, respectively. These percentages are reasonable given
Ferguson's contribution to petitioner's success during the years
in issue.
Courts have considered whether the corporation provides
fringe benefits such as pensions or profit sharing plans. Rutter
v. Commissioner, 853 F.2d 1267, 1274 (5th Cir. 1988), affg. T.C.
Memo. 1986-407. Ferguson participated in petitioner's profit-
sharing plan and received other fringe benefits as well. This
factor favors respondent.
4. Conflict of Interest
The primary issue in considering factors indicating a
conflict of interest is whether some relationship exists between
the company and the employees which might permit the former to
disguise nondeductible corporate distributions of income as
salary expenditures deductible under section 162(a)(1). Trinity
Quarries, Inc. v. United States, supra at 210. The relationship
in this case, where Ferguson was petitioner's majority
shareholder, warrants scrutiny. Levenson & Klein, Inc. v.
Commissioner, 67 T.C. 694, 711 (1977).
The corporation's dividend history is a relevant factor to
consider. Petitioner paid no dividends, yet the absence of
dividend payments does not necessarily lead to the conclusion
that the amount of compensation is unreasonably high. Elliotts,
Inc. v. Commissioner, 716 F.2d at 1246. We shall not presume a
disguised dividend from the bare fact that a profitable
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