- 27 -
rendered". To fall within the ambit of section 162(a)(1), the
compensation must be both reasonable in amount and paid purely
for services. Sec. 1.162-7(a), Income Tax Regs. Typically, the
deductibility of compensation turns on whether the compensation
paid is reasonable in amount. Elliotts, Inc. v. Commissioner,
716 F.2d 1241, 1243-1244, (9th Cir. 1983), revg. and remanding
T.C. Memo. 1980-282. EIC bears the burden of proving the reason-
ableness of compensation. Rule 142(a).
The reasonableness of compensation is a question of fact to
be determined on the basis of all the facts and circumstances.
Pacific Grains, Inc. v. Commissioner, 399 F.2d 603, 606 (9th Cir.
1968), affg. T.C. Memo. 1967-7. Many factors are considered in
determining whether compensation is reasonable, and no single
factor is decisive. Mayson Manufacturing Co. v. Commissioner,
178 F.2d 115, 119 (6th Cir. 1949), revg. a Memorandum Opinion of
this Court. In Elliots, Inc. v. Commissioner, supra at 1245-
1248, the Court of Appeals for the Ninth Circuit, the Court to
which these cases are appealable, arranged these factors into
five broad categories.
The first factor focuses on the employee's responsibilities
and duties in the organization. Relevant considerations include
petitioner's qualifications, hours worked, duties performed, as
well as his importance to EIC's success. American Foundry v.
Commissioner, 536 F.2d 289, 292 (9th. Cir. 1976), affg. in part
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