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In addition, the fact that petitioner has never paid a
dividend does not control our analysis. As the Court of Appeals
for the Ninth Circuit stated in a similar setting, the court will
“not presume an element of disguised dividend from the bare fact
that a profitable corporation does not pay dividends.” Elliotts,
Inc. v. Commissioner, supra at 1244. Nor is it decisive that
petitioner may have paid Beiner compensation in 1999 and 2000
equal to 88.3 and 69.9 percent of those respective years’ net
income. As we stated supra in rejecting the same argument, the
amount of reasonable compensation that may be paid to a corporate
officer such as Beiner is a question of fact that must be
resolved on the basis of all credible evidence in the record.
Finally, from a factual point of view, we have already noted our
disagreement with respondent’s proposed finding that Beiner
reduced the number of hours that he worked in petitioner’s
business during the subject years.
7. Conclusion
We have concluded as to four of the five factors that a
hypothetical inactive independent investor would pay the disputed
compensation to Beiner in order to retain his services during
each of the subject years. We have concluded as to the remaining
factor, namely, an external comparison, that a hypothetical
inactive independent investor would limit Beiner’s compensation
in the subject years to $906,740 and $1,533,093, respectively.
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