-8-
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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