Law Offices--Richard Ashare, P.C. - Page 22

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          that petitioner paid Mr. Ashare the $1,750,000 to compensate him            
          for services connected to that case.                                        
               Respondent focuses on petitioner's longstanding compensation           
          formula and observes that the amount of Mr. Ashare's compensation           
          does not follow from an application of that formula.  Respondent            
          concludes that petitioner paid the $1,750,000 to Mr. Ashare                 
          without the requisite intent to compensate him for his services.            
          We do not agree.  Although it is true, as respondent observes,              
          that petitioner did not correctly apply its longstanding formula            
          to ascertain Mr. Ashare's compensation for 1993, petitioner's               
          management obviously decided that Mr. Ashare was entitled to be             
          paid a greater amount during that year.  It does not matter that            
          petitioner's revenues during that year were less than the                   
          $1,750,000 payment, or that the $1,750,000 payment produced a               
          deficit in retained earnings.  The dispositive fact of this case            
          is that petitioner's board, through an exercise of unwritten                
          corporate policy, set Mr. Ashare's compensation for 1993 at                 
               The facts of this case indicate that the board truly                   
          believed that Mr. Ashare's services were worth paying him                   
          $1,750,000 in 1993.  Mr. Bess testified adamantly that the board            
          considered the value of petitioner's past and present services              
          when it set Mr. Ashare's compensation for each year, and we find            
          in the record that the board knew how to limit Mr. Ashare's                 

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