B & D Foundations, Inc. - Page 9




                                        - 9 -                                         
                         Mr. Myers    Mrs. Myers    Totals                            
          Salaries   $586,500     $288,500      $875,000                              
          Bonuses     163,0001      75,8002       238,800                             
          Totals      749,500      364,300     1,113,800                              
          1Of this $163,000, $125,000 was said to be a bonus for                      
          fiscal year 1995 and $38,000 a bonus for fiscal year                        
          1996.                                                                       
          2Of this $75,800, $58,000 was said to be a bonus for                        
          fiscal year 1995 and $17,800 a bonus for fiscal year                        
          1996.                                                                       
          As described infra pp. 10-11, 13, petitioner also made                      
          contributions on behalf of Mr. and Mrs. Myers to a qualified                
          retirement plan and further agreed to make specified deferred               
          compensation payments to each of them.                                      
               Petitioner had no fixed formula for determining the annual             
          salaries and bonuses paid to Mr. and Mrs. Myers.  Until the                 
          fiscal year ended July 31, 1996, Mr. and Mrs. Myers, petitioner’s           
          directors, generally around the beginning of the fiscal year,               
          would set the respective salaries they were to receive for that             
          year.  At the same time, they would authorize Mr. Myers, as                 
          petitioner’s president, to pay himself and Mrs. Myers whatever              
          raises, fringe benefits, and bonuses that he considered                     
          appropriate for that year.  For example, concerning the                     
          respective salaries and bonuses paid to Mr. and Mrs. Myers for              
          the fiscal year ended July 31, 1995, the minutes of petitioner’s            











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