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substantially more profitable than virtually all of the 34
companies in terms of the ratio of gross profit to sales.
Wertlieb opined that petitioner returned more as a percentage of
equity to its investor than any of the 34 companies returned to
their investors. Wertlieb concluded that Beiner’s reasonable
compensation for the respective subject years was $906,740 and
$1,533,093 and that these amounts were consistent with the
salaries paid by similar companies for similar services.
Wertlieb noted that Beiner was performing the functions of a wide
range of employees.
Respondent argues that we should ignore the “Excess Gross
Profits” portion of Wertlieb’s report as to Beiner’s reasonable
compensation because, respondent states: “Wertlieb provided no
evidence that any of the companies he surveyed employed such a
compensation plan.” We decline to do so. First, experts, but
for their testimony, are not the source of evidence; the parties
are. See United States v. Scheffer, 523 U.S. 303, 317 n. 13
(1998). Second, Wertlieb’s testimony, all of which was credible
and without contradiction, was that an employer such as
petitioner may pay an employee such as Beiner reasonable
compensation inclusive of all gross profit in excess of the gross
profit that the employer would have realized had it performed at
the 90th percentile of similar public companies. In a case such
as this, where Beiner’s services were directly, if not solely,
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