Joseph Francis Cunningham - Page 5

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          provides access to all areas of the building including the areas            
          used for the art gallery as well as for petitioner's residence.             
               There is no door at the bottom or top of the stairs leading            
          to petitioner's residence preventing access to the residence from           
          the rest of the building.  Although petitioner placed a "private"           
          sign on the stairway leading up to his residence, there are no              
          permanent dividing walls or partitions separating the residence             
          from the art gallery.                                                       
               The property upon which the building is located is subject             
          to a single deed.  Similarly, there is a single real estate tax             
          assessment for the property and one sewage and water bill.  There           
          were separate telephone lines for the art gallery and                       
          petitioner's residence.  Electricity and natural gas usage were             
          also metered and billed separately.                                         
               Petitioner incorporated FOTA Gallery, Inc. (FOTA) in 1986.             
          FOTA's purpose was to own and operate the art gallery, which it             
          did during the years in issue.  Without a lease, or any other               
          formalities, it appears that petitioner allowed FOTA to use the             
          street and basement levels of the building for the operation of             
          the art gallery.2  FOTA held its first art show in 1987.                    

          2A real estate settlement statement introduced into evidence                
          as one of respondent's exhibits indicates that FOTA, rather than            
          petitioner, was the purchaser of the building.  Petitioner signed           
          this settlement statement on behalf of FOTA as president of the             
          corporation.  Contrary to the settlement statement, the                     
          stipulation of facts included the following paragraph:  "The                
          petitioner purchased a three level structure. * * *  The                    
          structure was purchased by petitioner on December 4, 1986."                 




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