John and Jean own 80% and 20%, respectively, of Plum Corporation stock. Thanks to

their hard work, Plum's software sales have sky rocketed. In its first year of operation

Plum's earnings were minimal, but four years later, Plum grossed $10 million. Plum compensated John and Jean as follows: John received a bonus of 76% of net profits and Jean

received a bonus of 19% of net profits at the end of each year. Plum never paid any dividends.

Plum can deduct any or all of the "salaries" paid to John and Jean.