E.J. Harrison and Sons, Inc. - Page 38

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               This factor invokes a comparison between the employee’s                
          salary and salaries paid by similar companies for similar                   
          services.  Elliotts, Inc. v. Commissioner, 716 F.2d at 1246.                
               The only evidence relating to this factor is that contained            
          in the report submitted by respondent’s expert, Mr. Carey, who              
          likens Mrs. Harrison’s activities to those of an outside board              
          chair.  He cites, as appropriate compensation for Mrs. Harrison’s           
          services, the median compensation paid to board chairs during the           
          audit years by other companies with comparable sales revenues as            
          derived from surveys conducted by Economic Research Institute               
          (ERI).  Except for a small ($696) discrepancy for the 1997                  
          taxable year, the compensation amounts derived by Mr. Carey from            
          the ERI data are allowed, by respondent, as reasonable                      
          compensation to Mrs. Harrison.                                              
               Petitioner objects to Mr. Carey’s (and respondent’s)                   
          characterization of Mrs. Harrison’s duties as equivalent to the             
          duties of a board chair and, in particular, to the duties of an             
          outside board chair.  Petitioner also questions the relevance of            
          the ERI survey because of its failure to identify the number of             
          responding companies, whether they were public or private, and              
          whether the chairs were from inside or outside the responding               
          companies.                                                                  
               We find that petitioner’s objections are unfounded.  A                 
          general description of the duties of a board chair submitted by             
          Mr. Carey (to which petitioner raises no objection) confirms the            




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