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proprietorship. Petitioner argues that it qualifies under
section 104(a)(2) because it is a “small, individually-owned
‘family business’ that has been incorporated for liability,
insurance and perhaps tax purposes”. Petitioner’s objection is
supported by the affidavit of Mr. Magaddino.
We hold for respondent. Unless otherwise stated, section
references are to the Internal Revenue Code in effect for the
year in issue. Rule references are to the Tax Court Rules of
Practice and Procedure. Dollar amounts are rounded to the
nearest dollar.
Background2
Petitioner is a corporation that was incorporated on
August 2, 1947. It owns and operates a retail grocery store in
San Leandro, California. When it petitioned the Court, its
principal place of business was in Danville, California.
On December 18, 1989, petitioner filed a lawsuit in the
Superior Court of the State of California against the Defendants.
The Complaint set forth six causes of action. The first cause
alleged that some of the Defendants had breached their lease with
petitioner by overcharging it $101,041. The Complaint prayed for
return of this overcharge, as well as statutory attorney's fees
2 The “facts” presented in this Opinion are stated solely
for purposes of deciding the motion and are not findings of fact
for this case. Fed. R. Civ. P. 52(a); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965
(7th Cir. 1994).
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