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Regs. Petitioner bears the burden of proving facts showing good
faith and reasonable cause. See Rule 142(a).
The same circumstances that led to our finding that a
portion of the bonuses paid to the shareholder surgeons
constituted a disguised dividend rather than a payment purely for
services rendered by them also lead us to sustain respondent’s
imposition of the section 6662(a) penalty. When asked during the
trial why petitioner had never paid a dividend, Dr. Mann
responded: “Well, we are not a very big organization and all of
our income comes from just the work we did. And we just treated
everything as salary.” But Dr. Mann’s professed good faith
belief that the monthly bonus payments of all available earnings
reasonably represented payments for services rendered by the
shareholder surgeons is belied by his later testimony that,
within a short time after they arrive (and, certainly, within the
2-year employment period), the nonshareholder surgeons also
“made money” for petitioner. Given that Dr. Mann and, by
implication, the other shareholder surgeons were aware that at
least a portion of petitioner’s profits were attributable to
services performed by the nonshareholder surgeons, we are not
persuaded that petitioner’s treatment of its distribution of
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