J. Michael Joly and Bonnie B. Joly, Jody Steven Joly, and David Andrew Joly - Page 11

                                       - 11 -                                         
          167, 173 (6th Cir. 1982), revg. 72 T.C. 793 (1979); Mayson                  
          Manufacturing Co. v. Commissioner, 178 F.2d 115, 119 (6th Cir.              
          1949), revg. a Memorandum Opinion of this Court.                            
               The Court of Appeals for the Sixth Circuit, the court to               
          which an appeal in this case lies, has adopted a set of basic               
          factors to be considered by the Court in deciding the                       
          reasonableness of compensation:  (1) The employee's                         
          qualifications; (2) the nature, extent, and scope of the                    
          employee's work; (3) the size and complexities of the employer's            
          business; (4) a comparison of salaries paid with the employer's             
          gross and net income; (5) the prevailing general economic                   
          conditions; (6) a comparison of salaries paid with distributions            
          of retained earnings; (7) the prevailing rates of compensation              
          for comparable positions in comparable concerns; (8) the salary             
          policy of the employer as to all employees; and (9) in the case             
          of small corporations with a limited number of officers, the                
          amount of compensation paid to the particular employee in                   
          previous years.  Kennedy v. Commissioner, supra at 173-174;                 
          Mayson Manufacturing Co. v. Commissioner, supra.  The facts must            
          be considered as a whole with no single factor decisive.  Mayson            
          Manufacturing Co. v. Commissioner, supra.                                   
               Petitioners urge the Court to find that respondent erred in            
          determining that any amounts of employee wages were paid to                 
          Michael and Jody.  In other words, they do not argue that a                 
          finding of lesser amounts of employee wages would be more                   




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011