- 17 - 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.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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