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States and totaled approximately 1,100. In short, petitioner had
during the subject years a strong character and a strong
financial condition.
Respondent argues that petitioner was a simple (as opposed
to complex) business that required few personal skills. We
disagree. During the respective subject years, neither
petitioner’s sales nor its gross profits could have been attained
but for the personal skill of Beiner in obtaining Allen-Bradley
parts at prices less than those at which the same types of parts
were sold to the authorized distributors.7 Although petitioner’s
business may not be the most complex business in operation, we do
not consider it to have been a simple task for petitioner to have
purchased its Allen-Bradley inventory from the three OEMs at
deeply discounted prices given their agreement with Allen-Bradley
not to sell those parts at all except in a very limited situation
that did not apply here.
We conclude that a hypothetical inactive independent
investor would consider this factor favorably to require the
payment of the disputed compensation to Beiner in order to retain
his services during each of the subject years.
7 We find nothing in the record to indicate that these sales
were attributable to the general economic conditions.
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