- 7 -
Commissioner, supra at 1324; Estate of Wallace v. Commissioner,
supra at 556.
Recent cases in some Courts of Appeals have adopted a
somewhat different view of this analysis, substituting instead an
independent investor test. See, e.g., Exacto Spring Corp. v.
Commissioner, 196 F.3d 833, 838 (7th Cir. 1999), revg. Heitz v.
Commissioner, T.C. Memo. 1998-220. This case is appealable to
the Court of Appeals for the Third Circuit, which has not adopted
the independent investor test but has endorsed the traditional
multifactor test. See B.B. Rider Corp. v. Commissioner, 725 F.2d
945 (3d Cir. 1984), affg. in part and vacating in part on other
grounds T.C. Memo. 1982-98. We have applied the multifactor test
for reasonableness, viewed through the lens of an independent
investor, when a case is not appealable to a circuit that has
addressed this issue. See Haffner’s Serv. Stations, Inc. v.
Commissioner, T.C. Memo. 2002-38.
Whatever analysis is applied, petitioner has made a prima
facie case for reasonableness. Respondent has provided no
evidence to the contrary. Respondent conceded in the stipulation
that Richard, Sr.’s salary was within the range of salaries paid
to similarly situated executives. Respondent allowed all but
$65,000 of Richard, Sr.’s compensation. Respondent gives no
reasoning for his calculation of the “excessive” compensation.
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