Labelgraphics, Inc. - Page 19

                                       - 19 -                                         

               A.  Role in the Company                                                
               The first factor focuses on the compensated employee's                 
          importance to the success of the business.  Pertinent                       
          considerations include the employee's position, hours worked,               
          duties performed, and the general importance of the employee to             
          the company.  American Foundry v. Commissioner, 536 F.2d 289,               
          291-292 (9th Cir. 1976), affg. in part and revg. in part 59 T.C.            
          231 (1972).  Where a large salary increase is at issue (similar             
          to the instant case), it is further useful to compare past and              
          present duties and salary payments.  Elliotts, Inc. v.                      
          Commissioner, supra at 1245.                                                
               Mr. Martin was petitioner's key employee and the primary               
          reason for its success over the years.  As president, he was the            
          driving force behind petitioner's success from its inception, and           
          his personal services were essential to that success.  He managed           
          and built up petitioner's business, designed its physical plant             
          and layout, and trained other later members of its management               
               Although he had delegated some administrative duties and               
          general business responsibilities to Mr. Crispe by the 1990                 
          fiscal year in issue, Mr. Martin remained the driving force                 
          behind petitioner.  Further, while he was also devoting some time           
          and attention to Caribe in Puerto Rico, being petitioner's                  

Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011