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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 of Northern New England, Inc. v.
Commissioner, T.C. Memo. 1978-514. Petitioner paid $230,000 to
Isidore Klein in both 1993 and 1994 after the end of the first
three quarters, and $70,000 in 1993 and $86,000 in 1994 just
before the end of the year. Steven Klein had petitioner pay him
$420,000 in the final week of 1995. The yearend payments to
Isidore and Steven Klein were made after petitioner’s accounting
firm had prepared petitioner’s quarterly financial statements and
computed petitioner’s earnings for the first three periods.
The payments to Isidore and Steven Klein left petitioner
with a nominal amount of operating profits in 1993 and 1994.
Petitioner paid Isidore and Steven Klein 93 percent of its
taxable income before officers’ compensation in 1993 and 1994,
and Steven Klein 90 percent of its taxable income before
officers’ compensation in 1995. Paying most of petitioner’s
taxable income as compensation to its officers suggests that its
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