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services rendered: (1) Bonuses paid in exact proportion to
officers’ shareholdings; (2) payments made in lump sums rather
than as the services were rendered; (3) a complete absence of
formal dividend distributions by an expanding corporation; (4) a
completely unstructured bonus system, lacking relation to
services performed; (5) consistently negligible taxable corporate
income; and (6) bonus payments made only to the officer-
shareholders. See O.S.C. & Associates, Inc. v. Commissioner,
supra at 1121; Nor-Cal Adjusters v. Commissioner, 503 F.2d at
362; Wagner Constr., Inc. v. Commissioner, T.C. Memo. 2001-160.
Although not all six factors from the list, supra, are
present with respect to Mr. Menard’s compensation,51 other
factors demonstrate that a portion of Mr. Menard’s compensation
was a disguised dividend. One relevant factor is that Menards
has never paid a dividend, despite its tremendous growth over the
years.52 In addition, Menards paid the 5-percent bonus in one
51During TYE 1998, Mr. Menard was the only officer-
shareholder who received a bonus. Chris Menard was a class B
shareholder, but the record does not indicate whether he received
a bonus during TYE 1998.
Additionally, during TYE 1998, although other executives
received bonuses, Mr. Menard’s bonus was firmly set at 5 percent
of Menards’s net income before taxes, and the record contains no
evidence that Menards had consistently negligible taxable income.
52We recognize that, in Exacto Spring Corp. v. Commissioner,
196 F.3d 833, 837 (7th Cir. 1999), revg. Heitz v. Commissioner,
T.C. Memo. 1998-220, in rejecting the multifactor test, the Court
of Appeals for the Seventh Circuit observed that “the low level
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