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compensation. Owensby & Kritikos, Inc. v. Commissioner, supra at
1324. Mr. Heitz owned approximately 55 percent of Exacto's
common stock, and Mr. Quillen and Mr. Green each owned 20
percent. During the years in issue, Mr. Heitz’ compensation was
approved by Mr. Green and Mr. Quillen. It is more unlikely that
Mr. Greene and Mr. Quillen would have approved a substantial
"disguised dividend" to Mr. Heitz where they did not receive a
substantial dividend or some other benefit as well. When there
is no close relationship between the share of compensation and
the share of stock holdings, it may be a persuasive indication
that the company is receiving compensable services and that
profits are not being siphoned out of the company disguised as
salary. See Mayson Manufacturing Co. v. Commissioner, 178 F.2d
at 119-120.
We have considered the factors relevant in deciding
reasonable compensation for Mr. Heitz. On the basis of all the
evidence, we hold that reasonable compensation for Mr. Heitz for
taxable years ended May 31, 1993 and 1994, is $900,000 and
$700,000, respectively. These amounts are in addition to the
salary Mr. Heitz received from Hickory, which we have considered
in determining his overall reasonable compensation.
In deciding the above-stated amounts to be reasonable
compensation, we have balanced Mr. Heitz’ unique selling and
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