Ronald and Judith Francis - Page 8

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          decided on the basis of the facts and circumstances of each case.           
          See Estate of Wallace v. Commissioner, 95 T.C. 525, 553 (1990),             
          affd. 965 F.2d 1038 (11th Cir. 1992).  Further, there are no                
          fixed rules or exact standards for determining what constitutes             
          reasonable compensation, although a number of factors have been             
          identified as relevant.8  See Golden Constr. Co. v. Commissioner,           
          228 F.2d 637, 638 (10th Cir. 1955), affg. T.C. Memo. 1954-221.              
          With these rules in mind, we determine whether the compensation             
          Mrs. Francis received for business-related services was                     
          reasonable in amount.                                                       
               The employment agreement for Mrs. Francis did not set the              
          number of hours she was required to work to earn her pay and                
          benefits, nor did Mrs. Francis keep a time log recording the                
          number of hours she worked for the farm in 2001.  Petitioners did           
          not establish what Mrs. Francis earned on an hourly basis because           
          they did not prove how many hours she worked, and they did not              
          establish what employees doing comparable work on other similarly           
          sized farms in the vicinity were paid hourly.                               
               We apply close scrutiny to the facts in a family situation             
          and find petitioners did not prove that any of the compensation             
          paid to Mrs. Francis for services she provided the farm was                 
          reasonable in amount to the extent it exceeded the $1,998 that              


               8See Miller & Sons Drywall, Inc. v. Commissioner, T.C. Memo.           
          2005-114, for a list of the relevant factors.                               




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