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Respondent, on the other hand, contends that only $245,600
is reasonable. Respondent argues that there was no compensatory
purpose for the remaining balance, and that Mr. Martin arranged
this large disguised dividend in preparation for selling
petitioner to his son Mike.
Accordingly, we shall analyze and apply the factors
enunciated by the Court of Appeals for the Ninth Circuit in
Elliotts, Inc. v. Commissioner, supra, in order to determine
reasonable compensation for Mr. Martin.
Petitioner and respondent offered the testimony of three
expert witnesses. Petitioner's two experts, John Culbertson
(Culbertson) and Pamela Jones (Jones), each own management
consulting firms and have advised their respective corporate
clients on executive compensation. Respondent's expert, Paul T.
Clausen (Clausen), owns his own business valuation company and
has testified as an expert witness on the valuation of business
assets, business interests, and reasonable executive compensation
in numerous court cases.
As trier of fact, we are not bound by the opinion of any
expert witness and will accept or reject expert testimony, in
whole or in part, in the exercise of sound judgment. Helvering
v. National Grocery Co., 304 U.S. 282, 295 (1938); Silverman v.
Commissioner, 538 F.2d 927, 933 (2d Cir. 1976), and cases
thereat, affg. T.C. Memo. 1974-285.
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