E.J. Harrison and Sons, Inc. - Page 46

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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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