Wechsler & Co., Inc. - Page 60

                                       - 60 -                                         
              C.  Reasonable Compensation to Mr. Wechsler                             
                   1.  Introduction                                                   
              We believe that an appropriate method for reasonably                    
         compensating Mr. Wechsler for each of the years in issue should              
         be based upon his receiving (1) an annual salary and (2) an                  
         annual bonus that is closely tied to petitioner’s earnings and               
         profitability for that year.  We reach that conclusion because we            
         are persuaded by respondent’s expert (Mr. Hakala) of the                     
         appropriateness of that method.  We are not persuaded by the                 
         approach of either of petitioner’s experts.  Our reasons follow.             
                   2.  Expert Testimony                                               
                   a.  Petitioner’s Experts                                           
                   i.  Mr. Matthews                                                   
              We give little if any weight to Mr. Matthews’s opinion                  
         concerning the reasonableness of the compensation petitioner paid            
         Mr. Wechsler for the years in issue to the extent it is based on             
         his comparisons between petitioner and the 27 broker-dealers he              
         examined.  We are persuaded by Mr. Dorf that Mr. Matthews’s                  
         approach in drawing an analogy between petitioner and the 27                 
         broker-dealers is unreliable because of the disparity in size                
         between petitioner and those companies.  See B & D Founds., Inc.             
         v. Commissioner, T.C. Memo. 2001-262 n.25 (rejecting expert’s                
         assumption that same mathematical relationship, calculated                   
         through regression analysis, between various surveyed companies’             






Page:  Previous  50  51  52  53  54  55  56  57  58  59  60  61  62  63  64  65  66  67  68  69  Next

Last modified: May 25, 2011