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car, and $740,537 that Rose received from PK Ventures and its
subsidiaries, along with the equity interests that Rose received
in PK Ventures and PKVI LP, were sufficient compensation for his
services to PK Ventures and its subsidiaries during 1986 through
1991.
We conclude that no portion of the amounts that PKV&S
deducted as officer compensation on its consolidated income tax
returns for 1992 and 1993 is attributable to deferred
compensation. Therefore, we must decide whether the $1,646,948
that PKV&S deducted in 1992 and the $2,031,933 that PKV&S
deducted in 1993 were reasonable amounts of compensation for the
services that Rose performed for PK Ventures and its subsidiaries
during those years.
The cases contain a lengthy list of factors that are
relevant when considering the reasonableness of the compensation
deductions claimed by a business, including: (1) The employee’s
qualifications; (2) the nature, extent, and scope of the
employee’s work; (3) the size and complexities of the business;
(4) a comparison of salaries paid with gross income and net
income; (5) the prevailing general economic conditions; (6) a
comparison of salaries with distributions to stockholders;
(7) the prevailing rates of compensation for comparable positions
in comparable concerns; (8) the salary policy of the taxpayer as
to all employees; and (9) the amount of compensation paid to the
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