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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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