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deductible by EIC because the payments did not constitute
reasonable compensation. With the foregoing five factors in
mind, we analyze the reasonableness of each payment.
The Commissions of $901,428 Paid in 1989
In EIC's notice of deficiency for 1989, respondent dis-
allowed the $901,428 deduction for real estate commissions paid
to petitioner. Respondent argues on brief that EIC has not
produced evidence showing how it computed the commissions or
explaining why the commissions were paid to petitioner. Peti-
tioner responds that the commissions relate to specific sales,
are consistent with the commissions paid to other salespeople,
and are therefore reasonable and fully deductible.
Petitioner maintains a broker's license, and actively
participated in many of the land sales by EIC during 1989. In
fact, petitioner's experience and ability as a salesman con-
tributed significantly to the success of EIC. If petitioner
participated in a sale, he was eligible to receive a commission
on the sale. If petitioner alone was responsible for making the
sale, he received the full 13-percent commission; otherwise, the
commission was allocated among all of the participants. The 13-
percent rate of commission is standard in the industry for these
types of land sales.
Considering the factors enumerated above, we conclude that
it was reasonable to pay petitioner a commission for each sale in
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