Tricon Metals & Services, Inc. - Page 17

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             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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