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preponderance of the evidence rather than on an allocation of the
burden of proof.
With respect to the White Rock Road, Roseville Road, and
Mosquito Road properties, only petitioner introduced direct
evidence regarding fair market rental value. In lieu of offering
evidence, respondent asks us to infer that the rents on these
properties were overstated in the same overall proportion as the
rents on the other three properties. We decline to do so. As
discussed infra, petitioner has established by a preponderance of
the evidence that the rents paid on these properties did not
exceed their fair market rental values.
II. Fair Market Rental Value of the Properties
In his notice of deficiency, respondent disallowed
petitioner’s rental deductions, in the gross amounts shown on the
following table, with respect to the six properties under review:
1996 1997 Total
Rent claimed $304,800 $327,700 $632,500
Rent disallowed
by respondent (203,600) (211,620) (415,220)
Rent allowed by
respondent 101,200 116,080 217,280
Respondent determined that the excess rents petitioner paid
constituted disguised dividends. Respondent claims that
petitioner’s purpose in disguising the dividends as rental
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