Labelgraphics, Inc. - Page 18

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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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