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In the Federal partnership return that Partnership filed for
1988, it did not accrue any rent under the lease agreement.
OPINION
Petitioner bears the burden of proving that respondent's
determinations in the FPAA are erroneous. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).
On brief, the parties agree that the lease agreement is a
section 467 rental agreement, as defined in section 467(d), and
that therefore Partnership is subject to section 467. Section
467 provides in pertinent part:
(b) ACCRUAL OF RENTAL PAYMENTS.--
(1) ALLOCATION FOLLOWS AGREEMENT.--Except as
provided in paragraph (2), the determination of the
amount of rent under any section 467 rental agreement
which accrues during any taxable year shall be made--
(A) by allocating rents in accordance with
the agreement, and
(B) by taking into account any rent to be
paid after the close of the period in an amount
determined under regulations which shall be based
on present value concepts.
(2) CONSTANT RENTAL ACCRUAL IN CASE OF CERTAIN TAX
AVOIDANCE TRANSACTIONS, ETC.--In the case of any sec-
tion 467 rental agreement to which this paragraph
applies, the portion of the rent which accrues during
any taxable year shall be that portion of the constant
rental amount with respect to such agreement which is
allocable to such taxable year.
(3) AGREEMENTS TO WHICH PARAGRAPH (2) APPLIES.--
Paragraph (2) applies to any rental payment agreement
if--
(A) such agreement is a disqualified
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