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integral to petitioner’s success, and each averaged between 55
and 60 work hours per week during the years in issue. Rocky and
Dean arrived at petitioner’s place of business at about 5:30 a.m.
to load the work trucks and deliver the materials to specific job
sites. Rocky and Dean hung drywall and performed any other
physical task that needed to be done. Petitioner’s consistent
sales and substantial pretax profit margins before shareholder-
employees compensation were due in part to the skills,
dedication, and efforts of Rocky and Dean. We find the extent
and scope of Rocky’s and Dean’s duties warrant high compensation.
This factor favors petitioner with respect to Rocky’s and Dean’s
compensation.
C. Size and Complexity of Petitioner’s Business
Courts consider the size and complexity of a taxpayer’s
business when deciding the reasonableness of compensation paid to
its shareholder-employees. See RTS Inv. Corp. v. Commissioner,
877 F.2d at 651; Charles Schneider & Co. v. Commissioner, 500
F.2d at 152. A company’s size is determined by its sales, net
income, gross receipts, or capital value. See Beiner, Inc. v.
Commissioner, T.C. Memo. 2004-219; Wagner Constr., Inc. v.
Commissioner, T.C. Memo. 2001-160.
During the tax years in issue, petitioner was a small
business, as measured by its annual gross sales, and its business
model indicates it was not interested in growth. After reviewing
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