-17-
ordinary. We believe respondent understates Eberl's level of
effort.
Michael Lawrence Melvin (Melvin) and K.D. Nunn have been
catastrophic claims adjusters for more than 20 years. They
testified that many people have tried to start a business like
petitioner, but they do not know anyone who has been as
successful as Eberl. Melvin formed an independent catastrophic
claims adjusting company similar to petitioner, but his company
went out of business in 1987 or 1988.
This factor favors petitioner.
3. Size and Complexity of Business
We consider the size and complexity of a taxpayer's business
in deciding whether compensation is reasonable. Rutter v.
Commissioner, supra; Pepsi-Cola Bottling Co. v. Commissioner,
supra; Mayson Manufacturing Co. v. Commissioner, supra. A
company's size is measured by its sales, net income, gross
receipts, or capital value. Elliotts, Inc. v. Commissioner, 716
F.2d 1241, 1246 (9th Cir. 1983), revg. and remanding T.C. Memo.
1980-282; E. Wagner & Son v. Commissioner, 93 F.2d 816, 819 (9th
Cir. 1937).
Respondent contends that petitioner's business was simple
because it sold only one service and performed few functions,
none of which were complex. Respondent points out that: (a)
Petitioner generally contracted with experienced claims adjusters
who needed little or no day-to-day supervision, (b) petitioner
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