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Exacto (D) engaged in the manufacture of precision springs. It was a close corporation and paid it, founder, $1.3 million and $1.0 million in salary for 1993 and 1994. The IRS determined that this amount was excessive and that Heitz should not have been paid no more than $381,900 and $400,000. The differences were then attributed to D. D appealed, and the Tax Court found that the maximum reasonable compensation for Heitz would have been $900,000 and $700,000. D appealed.

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