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no-fee cases, merely supplement her performance of substantial
managerial activities on petitioner’s behalf. Therefore, we find
those cases to be inapposite. Rather, we find that the factors
utilized in the guaranty fee cases are properly suited to the
task of determining what amount, if any, may be considered
reasonable compensation for Mrs. Harrison’s personal guaranties.
Because (1) Mrs. Harrison was willing to issue the guaranties
without compensation, (2) there is no evidence that businesses of
the same type and size as petitioner customarily paid guarantor
fees to shareholders, (3) petitioner had sufficient profits to
pay dividends, but failed to do so, and (4) the evidence does not
establish what amount, if any, would constitute reasonable
compensation for her guaranties, we find that Mrs. Harrison’s
guaranties do not support the characterization of any amount she
received from petitioner as reasonable compensation. Instead, we
view the shareholder guaranties in this case as a means of
protecting the shareholders’ ownership interests in petitioner,
not as a function of their employment by petitioner. See Olton
Feed Yard, Inc. v. United States, 592 F.2d at 275-276 (stating
that employee-shareholders’ willingness to guaranty, without
charge, the corporate employer’s debt is evidence that such
individuals “signed the guaranties in order to protect and
enhance their investment in the corporation”).
b. External Comparison
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