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accounts for Renier’s related-party excess compensation. Mr.
Kramer’s method was unsupported by any objective criteria; his
report’s assertion that there was a duplication of effort equal
to 15 percent of the amounts paid to related-party management
appears to be no more than a conclusory guess. The estate cites
no data to support the claim that the sales, management, and
bookkeeping functions being performed by related parties were
actually worth $120,000 per year in the Dubuque area. In
addition, the estate concedes on brief that in Renier’s fiscal
year ended June 30, 1990, Mark Renier, decedent’s other son, was
paid $100,000 in excess compensation. Mr. Kramer’s report,
however, fails to account for this figure. For these reasons, we
find more reliable Mr. Sliwoski’s approach based on actual data
from a Dubuque area wage survey.
While we find satisfactory Mr. Sliwoski’s basic methodology
of attempting to estimate the “market” replacement cost of the
necessary services that were provided by related parties, and
treating the excess of the amounts actually paid over their
market value as a normalizing add-back to income, we nevertheless
believe that Mr. Sliwoski’s estimate of the replacement cost of
the sales and management services provided by related parties
significantly understates the services’ value. Mr. Sliwoski
assumed that the sales and management functions being performed
by Kent could be accomplished in a 40-hour work week. Kent
testified that he worked in excess of 70 hours per week. While
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