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deductible compensation; and (5) whether the compensation was
paid pursuant to a structured, formal and consistently applied
program. Id. at 1245-1248; see also LabelGraphics, Inc. v.
Commissioner, T.C. Memo. 1998-343, affd. 221 F.3d 1091 (9th Cir.
2000) (the Elliotts, Inc. factors).
2. Need To Apply the Elliotts, Inc. Factors
In this case, respondent’s conclusion that petitioner’s
purported compensation payments to Mrs. Harrison constituted
disguised dividends to the extent of the disallowed amounts is
based, in large part, upon his conclusion that total payments
were well in excess of the amounts that may be considered
reasonable compensation for the services Mrs. Harrison performed
on petitioner’s behalf. Therefore, we must determine
reasonableness in terms of the Elliotts, Inc. factors.
3. Expert Reports
a. Introduction
Both parties offered expert testimony in support of their
respective positions.
In deciding the reasonableness of compensation, courts often
look to the opinions of expert witnesses. Nonetheless, we are
not bound by the opinion of any expert witness, and we may accept
or reject expert testimony in the exercise of sound judgment.
Helvering v. Natl. Grocery Co., 304 U.S. 282, 295 (1938); Estate
of Newhouse v. Commissioner, 94 T.C. 193, 217 (1990). Although
we may accept the opinion of an expert in its entirety, see
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