- 39 -
On the balance, we believe that Beiner’s reasonable
compensation for 1999 should be capped at $906,740, as testified
by Wertlieb. That testimony takes into account the comparative
salaries in the industry which we believe is most relevant to our
decision herein. See Metro Leasing & Dev. Corp. v. Commissioner,
376 F.3d 1015, 1119 (9th Cir. 2004) (the fact that a hypothetical
inactive independent investor would pay an employee compensation
equal to an amount in dispute is not decisive in and of itself),
affg. T.C. Memo. 2001-119; see also Menard, Inc. v. Commissioner,
T.C. Memo. 2004-207 (although compensation paid to an employee
may satisfy the independent investor test of Exacto Spring Corp.
v. Commissioner, 196 F.3d 833 (7th Cir. 1999), revg. Heitz v.
Commissioner, T.C. Memo. 1998-220, the compensation may be
unreasonable within the context of section 162(a)(1) to the
extent that it exceeds the compensation paid by a comparable
company to a similarly situated employee). Although Wertlieb
also testified that Beiner’s compensation for both subject years
was really only overstated by $2,833; i.e., the amount by which
the $2,437,000 paid to him during both years ($1,087,000 +
$1,350,000) exceeded the $2,439,833 of reasonable compensation
ascertained by Wertlieb for those years ($906,740 + $1,533,093),
we believe it appropriate to view each year separately rather
than collectively and hold that petitioner correctly reported
Beiner’s compensation for 2000 but overreported his compensation
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