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further develop and expand its business. Petitioner stated in
its memoranda of consent to corporate action that it would
reimburse Mr. Reeves for past underpayment and pay bonuses for
the extraordinary services he provided when petitioner became
more profitable.
Petitioner was a very profitable company in the fiscal years
at issue and paid Mr. Reeves and its other employees bonuses.
The bonuses paid were not awarded under a structured, formal, or
consistently applied program but were paid under petitioner’s
plan to award a bonus for present hard work and prior years’ lack
of compensation when it became more profitable.
F. Conclusion
Mr. Reeves, petitioner’s sole executive officer and manager,
was the driving force behind petitioner’s success. His vision
and hard work resulted in petitioner’s realizing sales of
$12,501,980, and $5,709,686, with a shareholders return on equity
of 93 percent and 25 percent in the respective fiscal years at
issue. The averages of the methods used to determine reasonable
compensation were $1,448,201 and $1,009,852 in the respective
fiscal years at issue, and taking into consideration the $547,350
Mr. Reeves was underpaid as of December 31, 1995, the Court finds
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