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given where the paying corporation is controlled by the
compensated employee, as in the instant case. Rapco, Inc. v.
Commissioner, supra at 954-955; Elliotts, Inc. v. Commissioner,
supra at 1246-1247. Also, the existence of a family relationship
may indicate that the terms of a compensation arrangement may not
have been the result of a free bargain. Elliotts, Inc. v.
Commissioner, supra at 1246. However, the mere fact that the
individual whose compensation is under scrutiny is the sole
shareholder of the company, even when coupled with an absence of
dividend payments, “does not necessarily lead to the conclusion
that the amount of compensation is unreasonably high.” Id.
Instead, the fact finder is further to adopt the perspective of
an independent investor in determining whether the investor would
be satisfied with the company’s return on equity after the
compensation in issue was paid. Id. at 1247.
Clearly, Mr. Wechsler’s relationship to petitioner
influenced petitioner’s payments of compensation to Mrs. Wechsler
and Gilbert, some or all of which were not reasonable
compensation for services rendered to petitioner and, we suspect,
were disguised dividends to Mr. Wechsler. We thus carefully
examine petitioner’s corporate motives in making the payments in
question to Mr. Wechsler.
As set forth in our findings, principal managers of
financial industry investment and trading companies typically
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