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concerned about his condition, so he appointed his wife, Lena
Valente, to be petitioner’s president during the years under
consideration. During 1995 and 1996, Mrs. Valente was 66 and 67
years of age, respectively. Even though he was ill, Mr. Valente
remained active in petitioner’s business by means of a
cooperative effort with Mrs. Valente. Under that arrangement,
Mr. Valente was the decision-maker, and Mrs. Valente executed his
decisions. Mr. Valente determined the amount of compensation to
be paid to officers based on the profitability of the business.
Because of their joint efforts, Mr. and Mrs. Valente’s
compensation was treated as an undivided amount for their
combined efforts. Mrs. Valente became ill during 1996, retiring
at the end of that year, and she died during 1998.
Mr. Valente became involved in the automobile business in
1959 and at one point owned seven automobile dealerships and an
automobile leasing company. Mr. Valente sold the last of his
automobile dealerships, Green Valley Ford, in 1990. In
connection with the last sale, Mr. Valente agreed to provide
business consultation to the new owners and to “run” the profit-
sharing plan. The new owners agreed to provide the Valentes with
a new car each year. In 1991, Mr. Valente received $20,444 of
compensation from Green Valley Ford and for 1992, 1993, 1995, and
1996 he received $1,690, $2,851, $3,289, and $2,049,
respectively. For 1995 and 1996, Mr. Valente received
distributions of $55,307 and $76,076, respectively, from Green
Valley Ford’s profit-sharing plan.
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