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related to the RMA samples for 1995 and 1996. Petitioner’s brief
makes assumptions that are not stated in the brief and that
appear to be neither supported by nor contradicted by the record.
Respondent’s brief on this issue seems to be totally irrelevant
to a reasonable compensation analysis, even though it may be
significant to an analysis of petitioner’s intent.
We are left with Hakala’s observation that some adjustment
for nonsalary benefits “might be considered appropriate in a
market compensation analysis”. Because of Hakala’s observation,
and in light of the lack of foundation for the use of 24.4
percent for mobile home retailers of petitioner’s size, we
conclude that we should adjust upward by some amount the
estimates derived from the RMA ratios. See Kennedy v.
Commissioner, 671 F.2d 167, 175 (6th Cir. 1982), revg. 72 T.C.
793 (1979). Doing the best we can with the record in the instant
case, we increase our 1995 reasonable compensation determination
to $550,000 and our 1996 reasonable compensation determination to
$630,000.
(5) Independent Investor Returns
In reaching his reasonable compensation figures, Hakala
“relied primarily our [on ?] investor return analysis as an
indication of the upper bound on executive compensation such that
an arm’s-length investor in the Company is able to realize a fair
return on equity.”
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