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relevant in determining the reasonableness of compensation.
Mayson Manufacturing Co. v. Commissioner, 178 F.2d 115, 119 (6th
Cir. 1949), revg. and remanding a Memorandum Opinion of this
Court. No single factor is dispositive. Pacific Grains, Inc. v.
Commissioner, 399 F.2d at 606; Home Interiors & Gifts, Inc. v.
Commissioner, 73 T.C. 1142, 1156 (1980). In Elliotts, Inc. v.
Commissioner, supra at 1245-1248, the Court of Appeals for the
Ninth Circuit, to which this case is appealable, used a five-
factor test: (1) The employee's role in the company; (2) a
comparison of the compensation paid to the employee with the
compensation paid to similarly situated employees in similar
companies; (3) the character and condition of the company; (4)
whether a conflict of interest exists that might permit the
company to disguise dividend payments as deductible compensation;
and (5) whether the compensation was paid pursuant to a
structured, formal, and consistently applied program.
The parties recognize the applicability of the Elliotts,
Inc. test. However, they disagree concerning the amount of
purported compensation to Mr. Martin that qualifies as reasonable
compensation under that test.
Petitioner contends that the entire $878,913 Mr. Martin
received is reasonable compensation. Although it acknowledges
that Mr. Martin was given an "unusually high" bonus of $722,913,
petitioner maintains this bonus represented reasonable
compensation for his unique services.
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