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expert’s opinion, if any, to accept, Parker v. Commissioner, 86
T.C. 547, 562 (1986).
Petitioner and one of its experts, Gilbert E. Matthews, on
the one hand, argue that reasonable compensation for Mr. Wechsler
should be determined by considering data with respect to 27
broker-dealers that Mr. Matthews surveyed, particularly the
averages of the ratios of (1) aggregate compensation to net
revenues and (2) aggregate compensation to pretax income before
compensation for each broker-dealer. Mr. Matthews compared those
averages to ratios similarly computed for petitioner to support
his conclusion that, in general, Mr. Wechsler’s compensation was
reasonable. Respondent and respondent’s expert, Scott D. Hakala,
on the other hand, maintain that reasonable compensation for Mr.
Wechsler should be based upon a typical compensation arrangement
given to an asset manager, with Mr. Wechsler receiving 40 percent
of the bonus pool.
As will be discussed more fully infra, neither of the
foregoing proposed approaches for determining reasonable
compensation for Mr. Wechsler (nor that of petitioner’s second
expert, Paul R. Dorf) is entirely appropriate. In particular,
petitioner is not reasonably comparable to the broker-dealers
selected by petitioner’s expert Mr. Matthews. Also, Mr. Hakala’s
allocation of 40 percent of the incentive compensation to Mr.
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