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particularly helpful, we do use some of the data and analyses
they provide in reaching our decision.
We first consider the Robert Morris Associates (hereinafter
sometimes referred to as RMA) report for the industry on
financial ratios, which provides data on, among other things,
executive compensation as a percentage of sales for companies
comparable to petitioner. Based on petitioner’s and the mobile
home retail industry’s financial performances in 1995 and 1996,
we conclude that Jack’s compensation as a percentage of sales
should be compared to those of executives in comparable companies
at around the 90th percentile. By multiplying petitioner’s sales
by the appropriate RMA factor for each year, we determine that
payments to Jack, as compensation for the services he performed
for petitioner, would have been about $520,000 in 1995 and
$600,000 in 1996. We add $5,000 to the 1995 amount on account of
Jack’s guaranty of a bank loan to petitioner.
We also consider the fact that petitioner did not provide
Jack with retirement benefits. Based on comments by respondent’s
expert, we conclude that an amount of about 5 percent of Jack’s
compensation would be sufficient to compensate him for the
absence of retirement benefits. This brings reasonable
compensation to about $550,000 in 1995 and $630,000 in 1996.
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