J. Michael Joly and Bonnie B. Joly, Jody Steven Joly, and David Andrew Joly - Page 12

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          appropriate and, due primarily to their failure to introduce any            
          corporate books and records, have not presented any credible                
          evidence upon which lesser amounts of employee wages may be                 
          determined.  Respondent's determinations were based on the only             
          records available, the corporation's bank statements, from which            
          respondent determined that regular payments were made to and on             
          behalf of Michael and Jody.                                                 
               The record firmly establishes the fact that Michael was the            
          driving force behind the corporation's business during the                  
          taxable years in issue.  At trial, Michael acknowledged his                 
          reputation as being highly regarded in the construction industry            
          and his role as the corporation's "rainmaker".  We are not                  
          convinced that Michael's participation in the corporation's                 
          activities was drastically reduced after 1992.  We believe that             
          he remained in complete control of the corporation even after               
          Jody began working for it.  Jody's role in the corporation, while           
          not as influential as his father's, certainly would have demanded           
          the modest salary that respondent determined he received.                   
               After carefully considering the factors listed above, we               
          find that respondent's determinations of the amounts of Michael's           
          and Jody's employee wages for the taxable years in issue                    
          constitute reasonable compensation for the services which they              
          provided to the corporation as employees during such years.                 








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