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shown to Internal Revenue Agent Paul Siebert (Agent Siebert) in
1992 during an audit of petitioner's tax liability for its fiscal
year 1990 to substantiate the truck rental expense petitioner was
claiming on its Federal income tax return for that fiscal year.
When respondent's agent was given the Nikki lease, he was not
informed it had been modified, and no addendum was attached to
the Nikki lease. An addendum had not been entered into at that
time.
The tire replacement clause in the Nikki lease was pointed
out to Kurt Caillier by Agent Siebert during the audit of
petitioner's tax liability for its fiscal year 1990. Thereafter,
Kurt Caillier signed for both the lessee and lessor an addendum
to the lease (the Nikki lease addendum) which stated as follows:
Confirming the existing practice between companies:
The Lessee shall be responsible for the replacement of
all worn tires and return the vehicle to Lessor with
the tire in good condition. Reasonable wear and tear
excepted.
The monthly rental shall take this into consideration.
April Leasing Corp. (April Leasing), Elissa Leasing Corp.
(Elissa Leasing), Andrea Leasing Corp. (Andrea Leasing), and
Stacey Leasing Corp. (Stacey Leasing) were also leasing companies
which were controlled by Kurt Caillier and Randy Caillier. These
companies were established in 1987 to lease concrete trucks to
entities controlled by the Caillier family in the same way that
Nikki's leased trucks to petitioner. The lease agreements
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