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scale for its construction workers, as Mr. Myers set each
worker’s hourly wage rate on an individual basis. The workers
further all usually received Christmas bonuses, and certain key
workers were paid additional bonuses.
In contrast, Mr. Myers and Mrs. Myers annually have set
their own compensation.
For obvious reasons, Mr. and Mrs. Myers, who were the only
members of petitioner’s management team, were compensated on a
different basis from petitioner’s construction workers. No other
employees of petitioner performed services similar to those of
Mr. and Mrs. Myers.
This factor is neutral.
I. Compensation Paid to Mr. Myers and Mrs. Myers
in Previous Years
Where a large salary increase is in issue (as in the case at
hand), it may be useful to compare past and present duties and
salary payments, Elliotts, Inc. v. Commissioner, 716 F.2d at
1245, in order to determine whether and to what extent the
current payments represent compensation for services performed in
prior years, which can be currently deductible. Lucas v. Ox
Fibre Brush Co., 281 U.S. 115, 119-120 (1930); Am. Foundry v.
Commissioner, 59 T.C. 231, 239 (1972), affd. in part and revd. in
part 536 F.2d 289 (9th Cir. 1976).
As indicated previously, respondent’s expert Mr. Packard
acknowledged that Mr. and Mrs. Myers were undercompensated during
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