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documented wage and benefit figures, this assumption produces an
annual compensation package of $71,997 (60 hours at $19.23 per
hour times 52 weeks plus 20-percent fringe benefits). If this
amount is adjusted for inflation for each of the years in the
base period,11 the total for the period is $418,117. When added
to Mr. Sliwoski’s reasonable compensation estimate for the
bookkeeping/office manager functions performed by Maria
($106,832) (the rate and hours assumptions for which we find
satisfactory), and increased by Renier’s average payroll tax
expense of 6.76 percent,12 the total reasonable compensation
expense for related-party employees for the base period is
$560,436. When this amount is subtracted from Renier’s actual
compensation to related-party employees during the base period of
$788,889,13 the excess compensation to related-party employees
equals $228,453, or an average of $39,540 per year. Thus, we
conclude that a normalizing adjustment in this amount to Renier’s
11 Mr. Sliwoski used the consumer price index (CPI)
published by the U.S. Census Bureau to adjust for inflation. We
make a similar adjustment in our computation. See U.S. Census
Bureau, Statistical Abstract of the United States, The National
Data Book 495 (119th ed., 1999).
12 Renier’s average payroll tax expense was derived from the
average payroll tax rate incurred by Renier during the base
period. The difference between this rate and the statutory rate
of 7.65 percent applicable during most of the base period is
presumably due to fringe benefits not subject to payroll tax.
See secs. 3111, 3121(a).
13 Actual related-party compensation figures were taken from
Mr. Sliwoski’s report; Mr. Kramer provided no comparable figures.
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