-22-
Petitioner contends that it set the amount of Eberl's pay at
the end of the fiscal year because of the contingent compensation
formula. We disagree. We believe Eberl decided the amount of
his compensation late in fiscal years 1992 and 1993 so he could
receive virtually all of petitioner's net profits as
compensation. See Petro-Chem Mktg. Co. v. United States, 221 Ct.
Cl. 211, 602 F.2d 959, 968 (1979) (Court inferred that bonuses
paid to shareholder-employees near the end of the year which
absorbed nearly all of the taxpayer's earnings were at least in
part a distribution of profits); Builders Steel Co. v.
Commissioner, 197 F.2d 263, 264 (8th Cir. 1952); Owensby &
Kritikos, Inc. v. Commissioner, T.C. Memo. 1985-267, affd. 819
F.2d 1315 (5th Cir. 1987); see e.g., Rich Plan, Inc. v.
Commissioner, T.C. Memo. 1978-514. The fact that petitioner made
lump-sum payments to Eberl that were not allocated between salary
and bonus also suggests that the payments to Eberl were in part
disguised dividends. See Nor-Cal Adjusters v. Commissioner, T.C.
Memo. 1971-200, affd. 503 F.2d 359 (9th Cir. 1974) (bonuses paid
to officer-stockholders that were computed based on the
availability of funds were distributions of earnings and thus not
deductible by the taxpayer).
This factor favors respondent.
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