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compensation than he had during the June 30, 1996, tax year.
These facts do not support a conclusion that during the years in
issue, petitioner was making catchup payments for the years prior
to 1997. Of the years in issue, only for the tax year ended June
30, 2000, did petitioner’s shareholder-employees receive
compensation over that paid in 1996. The record establishes that
this increase resulted from petitioner’s obtaining its most
profitable job ever, not from petitioner’s intention to remedy
past undercompensation. Even if petitioner intended some of the
payments in issue to remedy past undercompensation, petitioner
failed to establish the amount of the past undercompensation or
how much catchup compensation was allegedly paid during each year
in issue. Therefore, we hold that none of the compensation
petitioner paid for the years in issue was to remedy past
undercompensation.
We do not include this as a factor in our reasonableness-of-
the-compensation analysis because such a finding would not
necessarily indicate the shareholder-employees were
overcompensated. Instead, that analysis is based on the factors
discussed below.
VI. Application of Reasonable Compensation Factors
A. Employee Qualifications
An employee’s superior qualifications may justify high
compensation for his services. See Charles Schneider & Co. v.
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