Pediatric Surgical Associates, P.C. - Page 34




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          essentially all profits7 to the shareholder surgeons as salary              
          for services performed by them was based upon a good faith belief           
          that such was the case.  Cf. Comenout v. Commissioner, T.C. Memo.           
          1982-40, affd. 746 F.2d 1484 (9th Cir. 1984).                               
               Although it happened that, for the audit years, profits                
          attributable to the nonshareholder surgeons were small (and, for            
          1995, practically nil), such need not have been the case.  For              
          example, in 1996, collections attributable to Dr. Vaughan (still            
          a nonshareholder surgeon), totaled just under $460,000 as                   
          compared to $491,000 for Dr. Mann.  Under such circumstances,               
          the shareholder surgeons could not reasonably conclude that all             
          pre-distribution profits were solely attributable to services               
          performed by them and, therefore, available for bonus payments to           
          them.  It is the shareholder surgeons’ utter indifference to the            
          possibility that a portion of the annual prebonus profits might             
          have been derived from collections generated by nonshareholder              
          surgeons that justifies respondent’s imposition of the accuracy-            
          related penalty in this case.                                               





               7  Based upon Dr. Mann’s testimony that the bonuses to the             
          shareholder surgeons consisted of all available cash less the               
          amount necessary to meet anticipated expenses, we find that the             
          small amount of taxable income reported for each of the audit               
          years ($29,255 for 1994 and $49,323 for 1995) was no more than              
          the yearend set-aside needed to meet anticipated immediate and              
          near-term expenses for the following year.                                  





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