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personal services actually rendered". A two-prong test
determines deductibility: (1) Whether the amount of compensation
is reasonable in relation to services performed, and (2) whether
the payment is in fact purely for services rendered. Sec. 1.162-
7(a), Income Tax Regs. More specifically, bonuses paid to
employees are deductible "when * * * made in good faith and as
additional compensation for the services actually rendered by the
employees, provided such payments, when added to the stipulated
salaries, do not exceed a reasonable compensation for the
services rendered." Sec. 1.162-9, Income Tax Regs. Generally,
courts have focused on the reasonableness requirement in
determining the deductibility of purported compensation.
Elliotts, Inc. v. Commissioner, 716 F.2d 1241, 1243-1244 (9th
Cir. 1983), revg. and remanding T.C. Memo. 1980-282.
The reasonableness of compensation is a question of fact to
be answered by considering and weighing all facts and
circumstances of the particular case. Pacific Grains, Inc. v.
Commissioner, 399 F.2d 603, 605 (9th Cir. 1968), affg. T.C. Memo.
1967-7; Estate of Wallace v. Commissioner, 95 T.C. 525, 553
(1990), affd. 965 F.2d 1038 (11th Cir. 1992). Petitioner has the
burden of showing that it is entitled to a compensation deduction
larger than that allowed by respondent. Rule 142(a); Nor-Cal
Adjusters v. Commissioner, 503 F.2d 359, 361 (9th Cir. 1974),
affg. T.C. Memo. 1971-200.
Case law has provided an extensive list of factors that are
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