-30-
Petitioner paid Eberl less than 20 percent of its gross
receipts in fiscal years 1988 to 1991 and more than 20 percent in
fiscal years 1992 and 1993. Petitioner contends that its
payments to Eberl in fiscal years 1992 and 1993 in excess of 20
percent of its gross receipts were intended to compensate him for
services in petitioner's early years. We disagree. We do not
believe that Eberl was underpaid in prior years. The fact that
Eberl received less than he wanted from fiscal years 1988 to 1991
does not establish that he was underpaid. Cf. Alpha Medical,
Inc. v. Commissioner, supra (the shareholder had been underpaid
for past services because he had received but rejected an offer
paying more than $1 million annually); Comtec Systems, Inc. v.
Commissioner, T.C. Memo. 1995-4 (corporation's president and vice
president were underpaid for past services where both had
accepted low wages (and the vice president received no pay for 6
years) until the corporation was successful).
We conclude that none of the 1992 and 1993 compensation in
issue was catchup pay. This factor favors respondent.
12. Whether Employee Guaranteed Taxpayer's Debt
In deciding whether compensation is reasonable, courts have
considered whether the employee personally guaranteed the
employer's debt. See R.J. Nicoll Co. v. Commissioner, supra at
51. Petitioner had no debt. This factor does not apply here.
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