-9-
and Eberl met two or three times a year thereafter. Among other
things, at those meetings they discussed Eberl's desire to have
petitioner pay Eberl 20-25 percent of its revenues. Based on
these discussions, Eberl believed that they thought compensation
equal to 20-25 percent of petitioner's gross receipts would be
reasonable.
Petitioner paid salaries and bonuses (excluding pension and
profit-sharing contributions) to its officers and employees as
follows:
Kirk Grace Other
Fiscal year Eberl Eberl Soucie employees
1988 $40,000 -0- -- --
1989 608,000 $122,0001 -- --
1990 300,000 120,000 $6,560 -0-
1991 190,000 120,000 16,530 -0-
1992 4,340,000 120,000 21,980 $861
1993 2,080,000 120,000 26,190 6,394
1 This includes $2,000 paid in November 1989 for fiscal year
1988.
Petitioner has provided health and accident insurance for
Eberl since 1988. Effective May 28, 1990, petitioner started a
pension plan and a profit-sharing plan for its employees.
Petitioner contributed to the plan only if petitioner had
profits. Petitioner contributed a total of $30,000 each year to
its pension and profit-sharing plans for Eberl and for Grace
Eberl. It contributed a total of $5,495 in fiscal year 1992 and
$6,437 in fiscal year 1993 to its pension and profit-sharing
plans for Soucie.
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