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amount petitioner paid to Mr. Leonard in 1987 was chosen to a large
extent on the basis of the amount Mr. Leonard paid his wife in
connection with their divorce settlement. Moreover, it is clear to
us that, to a certain extent, the board of directors made a
deliberate effort to distribute petitioner's earnings to Mr.
Leonard by paying him the $1.68 million bonus 2 days before the end
of petitioner's tax year. That being said, however, we believed,
and we still believe, that a portion of the $1.68 million bonus
petitioner paid Mr. Leonard was intended to compensate him for past
and other valuable services he rendered to petitioner, and in that
regard that portion constituted reasonable compensation.
We concluded that $700,000 represented a reasonable amount of
total compensation for Mr. Leonard for 1987. This amount comprised
$200,000 as a salary, $195,000 as a bonus, and $296,000 as a lump-
sum retirement payment.6 See Pepsi-Cola Bottling Co. v.
Commissioner, 61 T.C. at 568. We rounded the $395,000 salary and
bonus to $400,000, and the $296,000 retirement figure to $300,000.
We determined the reasonableness of $395,000 (rounded to
$400,000) as a salary and bonus on the basis of the following
considerations: (1) All of the experts herein agreed that Mr.
6 In the context of valuations, we have determined that
the figure arrived at need not be one as to which there is
specific testimony if the amount is within the range of values
that may properly be arrived at giving consideration to all the
evidence. Silverman v. Commissioner, 538 F.2d 927, 933 (2d Cir.
1976), affg. T.C. Memo. 1974-285.
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