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Mr. Hakala opined that reasonable compensation for Mr.
Wechsler for petitioner’s 1992 through 1999 fiscal years would be
as follows:
Total
FYE May 31 Base Salary Bonus Compensation
1992 $390,000 $776,768 $1,166,768
1993 405,000 961,895 1,366,895
1994 390,000 511,130 901,130
1995 420,000 1,053,086 1,473,086
1996 390,000 1,536,230 1,926,230
1997 390,000 -- 390,000
1998 415,000 877,817 1,292,817
1999 571,694 -- 571,694
IV. Application of Reasonable Compensation Factors
A. Role in the Company
This factor focuses on the employee’s importance to the
success of the business. Pertinent considerations include the
employee’s position, hours worked, and duties performed and the
general importance of the employee to the company. Rapco, Inc.
v. Commissioner, 85 F.3d at 954-955; Elliotts, Inc. v.
Commissioner, 716 F.2d at 1245.
Since at least as early as 1988, Mr. Wechsler has been
petitioner’s key employee and the primary reason for its overall
success. He has worked long hours, been intimately involved in
managing petitioner’s business, and closely supervised all of
petitioner’s investment and trading activities.
In contrast to the evidence concerning Mr. Wechsler, the
evidence is sketchy concerning the work performed by Mrs.
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