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1974). Whether such intent has been demonstrated is a factual
question to be decided on the basis of the particular facts and
circumstances of the case. Electric & Neon, Inc. v.
Commissioner, supra at 1059.
We turn now to that factual question.
C. Discussion
1. Petitioner’s Principal Argument
Petitioner’s principal argument is:
In the instant case, the payments made to the
shareholder surgeons were clearly compensation for
services rendered and not disguised dividends.
Petitioner issued W-2 forms to its shareholder surgeons
and that income was duly reported on the surgeons’
personal tax returns. * * * Moreover, the salary
payments were properly deducted as such on Petitioner’s
tax returns.
Petitioner’s treatment of the reported amounts is consistent with
the board’s intending such amounts to constitute payments purely
for services. Nevertheless, since the shareholder surgeons owned
petitioner, the board was not necessarily concerned that
shareholder surgeon compensation not be overstated. See, e.g.,
Home Interiors & Gifts, Inc. v. Commissioner, 73 T.C. 1142, 1156
(1980) (“Where officers-shareholders, who are in control of a
corporation, set their own compensation, careful scrutiny is
required to determine whether the alleged compensation is in fact
a distribution of profits.”) Petitioner also argues that the
shareholder employment agreements pegged base compensation and
bonuses to the number of months worked during the year, which,
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