- 22 -
talents, or services of the officers were necessary for the
generation of the profit. Those are the same aspects that we
have considered to decide the amount of compensation that is
reasonable. Accordingly, petitioner must show here that the
Valentes were compensated for services and that the compensation
was reasonable; i.e., that the officers in these cases were
responsible for 81.6 percent and 88.7 percent of the profit.
Petitioner has not shown that the Valentes’ efforts in the
collection of petitioner’s established stream of income would
warrant any amount in excess of the annual $76,800 in
compensation that respondent determined was reasonable.
Petitioner, however, has shown that the increases to its income
for 1995 and 1996 due to the sale of assets during the 1995 and
1996 years were attributable to the Valentes’ efforts. Those
efforts produced additional income in the amounts of $25,922 and
$171,719 for 1995 and 1996, respectively.6 Unfortunately the
parties did not provide the Court with appropriate expert
testimony or some methodology by which to decide the quantum of
compensation (bonus) to be attributed to the results obtained by
6 The total income for 1992, 1993, and 1994 was $604,344,
$633,688, and $640,602 for an average total income of $626,211
($1,878,634 � 3). The total income for 1995 and 1996 was
$898,479 and $806,071 for increases of $272,268 and $179,860,
respectively. The $272,268 for 1995, however, includes $246,346
of income from recapture of depreciation, so that the increase in
earned income was actually $25,922 ($272,268 - $246,346). The
1996 income figure contained recapture of $8,141 so that the
adjusted income was $171,719.
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011