- 47 -
III. Conclusion
We consider respondent’s analogy of Mrs. Harrison’s
activities on petitioner’s behalf to the duties performed by an
outside board chair to be apposite. Moreover, Mr. Carey’s focus
on the median compensation paid to outside board chairs at
comparably sized companies appears reasonable in the absence of
evidence that Mrs. Harrison’s services should place her in either
a higher or lower percentile. We find, however, that Mrs.
Harrison’s lifetime devotion to petitioner’s business, the
respect for her judgment accorded by her sons who actually ran
the business on a day to day basis, and her dedication in the
performance of her public relations function, even at an advanced
age, afforded benefits to petitioner (whether tangible or
intangible) that were unlikely to have been afforded by an
outside board chair. We find that the value of those additional
benefits is adequately reflected by an 80-percent premium over
and above the median compensation paid to an outside board chair
during the audit years. Therefore, we hold that petitioner may
deduct the following amounts (rounded to the nearest $1000) as
compensation for services performed by Mrs. Harrison during each
of the audit years:
TYE 6/30 Amount
1995 $98,000
1996 101,000
1997 106,000
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