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(1) The bonuses were in exact proportion to the officers'
stockholdings;
(2) payments were in lump sums rather than as the services
were rendered;
(3) there was a complete absence of formal dividend
distributions by an expanding corporation;
(4) the system of bonuses was completely unstructured,
having no relation to services performed;
(5) the company's negligible taxable income for 4
consecutive years was an indication that the bonus system was
based on funds available rather than on services rendered; and
(6) bonus payments were made only to the officer-
stockholders in proportion to their stockholdings, and not to
other employees.
See, e.g., O.S.C. & Associates, Inc. v. Commissioner, 187 F.3d at
1120; Nor-Cal Adjusters v. Commissioner, 503 F.2d 359, 361-362
(9th Cir. 1974), affg. T.C. Memo. 1971-200.
In this case, all the factors indicate that portions of the
bonuses were disguised dividends.
F. Conclusion
We do not think that petitioner intended the relatively
small salaries paid to Dennis and Curtis during the year to fully
compensate them for their services. Thus, portions of the
bonuses paid to Dennis and Curtis at the end of the year were
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