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responsibility.” Id. at 1247. In this case, it is clear from
the minutes of the annual board meetings that officer
compensation was determined after the close of the taxable year
when earnings availability was either known or could be estimated
with reasonable accuracy. There is nothing in the board minutes,
nor is there any other evidence, to indicate that compensation
for nonofficer employees was set in the same manner. The sole
exception pertained to modest ($4,000) bonuses for a single
employee for the 1994 and 1995 tax years, which were also awarded
after the close of the taxable year.
There is also evidence that the salaries paid to
petitioner’s controlling shareholders greatly exceeded the
salaries paid to nonowner management. In 1995 (the only year for
which the record contains nonshareholder employee salary
information), the highest salary for a nonshareholder employee
was $79,639, paid to the company controller who reported to
Myron. That is less than 10 percent of the amount paid to Mrs.
Harrison and approximately 17 percent of the compensation paid to
Myron, James, and Ralph individually. Petitioner has failed to
introduce any evidence that might justify such large differences
in compensation.
The evidence pertaining to this factor also indicates that
Mrs. Harrison’s compensation during the audit years was more a
function of her stock ownership than of the value of the
services.
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