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Table 2
Name Position 1994 1995 1996
John Atkinson Sales Person $60,053 $75,407 $72,209
Garry Hood Sales Person NA 21,777 74,551
Kurt Ley Sales Manager NA 21,000 71,424
Patsy K. Watson Bus. Manager 31,428 37,946 40,250
Larry Gill Service Manager 51,161 56,827 62,523
Dale Hughes Sales Person 26,823 45,210 27,635
Tony Lewis Sales Person 42,763 55,434 41,445
Mary Brewer Bookkeeper/Decorator 21,765 21,744 18,000
2. Jack’s Compensation
During the years in issue, petitioner never had a
compensation, defined benefit, or profit-sharing plan for Jack.
Jack analogized petitioner’s compensation policy for him to that
of a farmer’s: If petitioner had a good year, then Jack had a
good year; if petitioner had a bad year, then Jack took “minimum
wages.”
Table 3 shows, for each of the years 1986 through 1996, (1)
petitioner’s claimed compensation payment to Jack, (2) that
claimed compensation as a percentage of gross sales (supra table
1), and (3) that claimed compensation as a percentage of taxable
income before deduction of that claimed compensation, supra table
1 as adjusted by adding back the claimed compensation to Jack.
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