- 3 -
Menard during TYE 1998 was purely for services, as required by
section 162 and section 1.162-7(a), Income Tax Regs. Petitioners
argue that Exacto Spring Corp. eliminated the multifactor test
not only for testing whether the compensation was reasonable but
also for testing whether the compensation was paid purely for
services and that it substituted a bad faith standard for
determining whether compensation was paid purely for services.
With respect to (2), petitioners contend that all of Exhibit
17-J is relevant and that we made factual findings inconsistent
with our ruling excluding information in Exhibit 17-J dealing
with years before TYE 1991.3 Petitioners allege that we must
have relied on the excluded part of Exhibit 17-J to find certain
facts and that we should revisit our ruling to correct the
mistake.
This Supplemental Memorandum Opinion rejects petitioner’s
contentions for the reasons set forth below.
Background
We adopt the findings of fact in Menard I. For convenience
and clarity, we repeat below the previously found facts necessary
2(...continued)
Spring Corp. v. Commissioner, 196 F.3d 833 (7th Cir. 1999), revg.
Heitz v. Commissioner, T.C. Memo. 1998-220.
3Our ruling with respect to Exhibit 17-J is set forth in n.4
of Menard I.
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