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investor would have been quite satisfied with petitioner’s
consistent growth, solid management, and other indications that
gains would continue.
Respondent contends that petitioner’s accountant performed
yearend planning “to severely limit petitioner’s taxable income”.
The bonus calculations were performed at yearend because it was
then that petitioner’s accountant had all the information
required to determine the appropriate amount of the payments.
Our focus is on the reasonableness of the amounts, not the
payment dates, of the compensation. The timing of the payments
does not lead us to conclude that Mr. Damron’s compensation was
unreasonably high. See Owensby & Kritikos, Inc. v. Commissioner,
819 F.2d 1315, 1323, 1329 (5th Cir. 1987) (stating that “No
single factor is decisive of the question * * * [although] such
substantial bonuses declared at year-end when the earnings of a
business are known usually indicate the existence of disguised
dividends”), affg. T.C. Memo. 1985-267.
Respondent also contends that the amounts he allowed are “in
line with” Mr. Damron’s compensation as an LKQ employee. All the
evidence presented at trial, however, established that Mr.
Damron’s responsibilities to LKQ were fewer, less stressful, and
less time-consuming than his previous work for petitioner. In
short, LKQ paid Mr. Damron less than petitioner paid because at
LKQ he delegated more of his responsibilities.
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