On Shore Quality Control Specialist, Inc. - Page 2

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          August 31, 1992, in the amounts of $2,717 and $3,120,                       
          respectively.                                                               
               The sole issue is whether section 274(a)(1)(B) disallows               
          deductions for payments incurred in leasing property used for               
          hunting game.                                                               
                                  FINDINGS OF FACT                                    
               On Shore Quality Control Specialist, Inc. (petitioner or On            
          Shore) is an oil and gas pipeline inspection company.  Eddie H.             
          Hooks, Jr. (Mr. Hooks) was the president of On Shore during the             
          years at issue.  At the time of filing the petition, petitioner's           
          principal place of business was Austin, Texas.                              
               Robert C. Carr (Mr. Carr) leased a 1,700-acre ranch (the               
          ranch) from Texas A&M University located west of Austin, Texas,             
          in the so-called Hill Country.  Mr. Carr raised cattle on the               
          ranch.  The lease entitled Mr. Carr to sublet the ranch for                 
          cattle grazing or hunting.  In 1979, petitioner, through its                
          agent, entered into an oral agreement (the hunting lease) with              
          Mr. Carr under which petitioner received the right to hunt on the           
          ranch.  The lease has been renewed yearly, or more precisely,               
          from hunting season to hunting season.  The property includes a             
          cabin that petitioner used.  Petitioner invited business                    
          customers to go hunting on the property.                                    








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