Menard, Inc. - Page 9

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          compensation greatly exceeded the compensation paid by Menards’s            
          chief competitors to their CEOs.                                            
               As respondent points out in his response to petitioners’               
          motion, petitioners make no attempt to explain why evidence of              
          Mr. Menard’s compensation for taxable years ended before 1991 has           
          any relevance to our analysis under the independent investor test           
          established in Exacto Spring Corp.  The independent investor test           
          focuses on the rate of return on equity for the year the                    
          compensation is paid.  The presumption of reasonableness created            
          by a qualifying rate of return is rebutted either by evidence               
          that something other than the CEO’s services generated or                   
          contributed to that year’s rate of return or by evidence that the           
          marketplace considered the CEO’s compensation for that year to be           
          unreasonable.  Petitioners have failed to explain how evidence of           
          Mr. Menard’s compensation in taxable years ended before 1991 is             
          relevant to any aspect of the independent investor test.                    
          Petitioners also failed to present any argument regarding why               
          this evidence is relevant to the “purely for services” prong of             
          the section 162 test for deducting compensation.                            
               The burden of demonstrating an exhibit’s relevance is on the           
          party seeking its admission.  Dowling v. United States, 493 U.S.            
          342 (1990).  Moreover, a court has broad discretion to determine            
          the admissibility of evidence based on remoteness in time.  Keyes           
          v. School Dist. No. 1, 521 F.2d 465, 473 (10th Cir. 1975).  The             






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