- 16 - services, and (b) the amount of the past undercompensation. See Pac. Grains, Inc. v. Commissioner, 399 F.2d 603, 606 (9th Cir. 1968), affg. T.C. Memo. 1967-7; Estate of Wallace v. Commissioner, 95 T.C. 525, 553 (1990), affd. 965 F.2d 1038 (11th Cir. 1992); Haffner’s Serv. Stations, Inc. v. Commissioner, T.C. Memo. 2002-38; Wagner Constr., Inc. v. Commissioner, T.C. Memo. 2001-160. The parties stipulated that petitioner’s board of directors meeting minutes indicate that in the tax year ended June 30, 1985, petitioner intended to compensate its shareholder-employees for past services. The record shows that the amount of compensation paid in that tax year was much larger than it had been in 19833 and the 4 subsequent years. This indicates that the payments were intended to rectify past undercompensation for services rendered. No such stipulation exists for the years in issue, and no board of directors meeting minutes for the years in issue are in the record. Additionally, in each tax year ending June 30, 1992 through 1996, the total compensation for a shareholder-employee of petitioner generally increased or remained consistent. During each tax year ending June 30, 1997 through 1999, each of petitioner’s shareholder-employees received less total 3These figures are taken from the expert reports. There are no compensation figures for 1984 in either report.Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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