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portable housing system as soon as he became owner of petitioner
in 1995 suggests that it did not have the profit potential
petitioner now claims.
b. Steven Klein’s Role
Petitioner contends that the amount of compensation it paid
to Steven Klein during the years in issue was reasonable because
of his superior skills and because he was the driving force
behind petitioner and solely responsible for its success in 1995.
We disagree in part.
Steven Klein ran petitioner with at best moderate success as
evidenced by petitioner’s modest increase in the real value of
sales, below average performance after officers’ compensation
(according to Hakala), and sharp decrease in profits from 1983 to
1995. We agree with Hakala that these results would not satisfy
an independent investor.
We also disagree that Steven Klein’s added duties or longer
hours in 1995 merit the large raise in his salary in 1995. We do
not believe that an independent investor would have been
satisfied with Steven Klein’s operation of petitioner in light of
Steven Klein’s assessment that petitioner was not very valuable
and that petitioner might not survive the loss of Isidore Klein
in 1995. Richard Schwaeber testified that petitioner had a cash-
flow problem and that its net worth essentially “disappeared”
when it redeemed Isidore Klein’s stock in 1995. We do not
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