Law Offices--Richard Ashare, P.C. - Page 24

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               We also believe it critical that petitioner had the funds to           
          pay Mr. Ashare the $1,750,000.  Petitioner did not pay Mr. Ashare           
          the $1,750,000 by way of a debt instrument such as a promissory             
          note.  Petitioner used funds which it was able to raise through a           
          liquidation of assets, most of which were obtained on account of            
          the efforts of Mr. Ashare, and through one or more loans.  The              
          fact that Mr. Ashare is the one who lent the funds to petitioner            
          is of no consequence.  It is a legitimate managerial function to            
          ascertain the amount of employee compensation that will be paid             
          in a year, and, absent abuse, which is not present here, we                 
          decline to second-guess management's decision on the amount and             
          timing of that compensation or on the manner in which management            
          goes about obtaining the underlying funds.                                  
               We hold that petitioner may deduct the $1,750,000 payment to           
          Mr. Ashare as reasonable compensation.  In so holding, we have              
          considered all arguments made by the parties and, to the extent             
          not discussed above, find them to be without merit.                         
               To reflect the foregoing,                                              
                                                 Decision will be entered            
          under Rule 155.                                                             

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Last modified: May 25, 2011