Hypothetical Investor Test Used to Determine Officers’ Reasonable Compensation

Business Valuation Update BVLaw
Legal and Court Case Update
March 27, 2000
3499 Fabricated Metal Products, NEC
332999 All Other Miscellaneous Fabricated Metal Product Manufacturing
federal taxation

Normandie Metal Fabricators, Inc. v. CIR
T.C. Memo. 2000-102
US
Federal Court
United States Tax Court
Paul Dorf <br> Scott D. Hakala <br>
Colvin

Summary

The Tax Court applied the hypothical invetsor test to determine whether the compensation a corporation paid to its controlling shareholders was reasonable.

See Also

Normandie Metal Fabricators, Inc. v. CIR

The Tax Court applied the hypothical invetsor test to determine whether the compensation a corporation paid to its controlling shareholders was reasonable. It considered the mulit-factor test from a reasonable investor's point of view. In doing so, the c ...