Law Offices--Richard Ashare, P.C. - Page 13

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               We must decide whether any or all of the $1,750,000 paid to            
          Mr. Ashare in 1993 was reasonable compensation under section                
          162(a)(1).  Petitioner argues it was, asserting that it paid Mr.            
          Ashare the disputed amount to compensate him for past and present           
          services.  Petitioner asserts that it had a formula under which             
          Mr. Ashare would be paid all legal fees received by petitioner              
          and that the $12,242,500 paid to Mr. Ashare over the 5-year                 
          period from 1989 to 1993 was less than the $12,567,623 received             
          on the Gentile case.  Respondent argues that the disputed amount            
          is nondeductible because it was neither reasonable in amount nor            
          paid to Mr. Ashare to compensate him for past or present                    
               Before deciding this issue, we pause to discuss a claim by             
          petitioner that respondent violated its rights under section                
          7605(b) by conducting a second examination of its books of                  
          account for 1993.  Petitioner contends that the revenue agent               
          performed a second examination when he asked Mr. Lieberman for              
          petitioner's minutes.  Petitioner asserts that respondent needed            
          petitioner's 1993 board resolutions to determine that petitioner            
          had paid Mr. Ashare unreasonable compensation during that year.             
          We understand petitioner to conclude that respondent, because of            
          the purported second examination, is precluded from asserting in            

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