- 34 -
sales, on the one hand, to Ding’s and Hakala’s different
approaches as to the RMA 75th percentile data.
Table 6
Petitioner RMA--Ding RMA--Hakala
1994 6.4 4.2 5.4
1995 8.7 4.2 5.4
1996 8.9 4.4 3.4
Averages
Ding (1986-1996) 4.6 4.2 --
Ding (1994-1996) 8.0 4.3 --
Hakala (1994-1996) 8.0 -- 4.7
Ding’s focus on 11-year averages led her to conclude that
petitioner’s 11-year average payment ratios are only a little
higher than the RMA 75th percentile ratios (4.6 percent to 4.2
percent) and much lower than the estimated RMA 90th percentile
ratios9 (4.6 percent to 5.9 percent). Hakala, on the other hand,
concluded that petitioner’s 1-year payment ratios are much higher
than the RMA 75th percentile ratios (8.0 percent to 4.7 percent).
Supra table 6.
Hakala also criticized Ding’s analysis, as follows:
In the tax year 1986 through 1993, BQH [petitioner] elected
S Corporation status. The owner-officer of an S Corporation
has an incentive to minimize personal salary and bonus
compensation and to recognize greater taxable corporate
9 Hakala ignores Ding’s estimates of RMA 90th percentile
ratios; he neither disputes nor accepts the correctness of Ding’s
estimates. However, on brief, respondent accepts the correctness
of Ding’s estimates of RMA 90th percentile ratios, at least for
the purpose of pointing out that petitioner’s 1995 and 1996
ratios are far higher than the ratios that Ding applies.
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