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business’s success is attributable to the employee’s prowess and
acumen or to other economic factors.
Petitioner argues its business was insulated from the
existing economic conditions. Dr. Sliwoski’s report states that
petitioner was shielded from economic fluctuations when compared
to other similar businesses because of its exceptional management
and business model that focused on consistent sales rather than
growth. Dr. Sliwoski did acknowledge in his report that the
economic conditions were favorable for the entire construction
industry during much of the 1990s. Given the favorable economic
conditions, respondent urges us to hold that the compensation
petitioner paid Darle, Rocky, and Dean was unreasonable. We
agree that the economic conditions were favorable, but whether
this factor supports either party depends on how these conditions
affected petitioner’s business.
Petitioner’s gross yearly sales in the 1990s remained fairly
consistent. Only during the tax year ended June 30, 2000, did
petitioner have a significant spike in sales. This spike was
mostly attributable to one large job petitioner had obtained.
Given petitioner’s business model and its consistent annual gross
sales, we believe the economic conditions had, at most, a minimal
impact on its success. In addition, nothing in the record
indicates that any of petitioner’s shareholder-employees worked
fewer hours because the economic conditions were favorable. No
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